US job growth slows to 29,000 in September as unemployment hits 4.2%

The U.S. labor market experienced a sharp slowdown in September, with employers adding only 29,000 jobs. The unemployment rate also climbed to 4.2%, missing growth expectations and impacting market outlooks on Federal Reserve policy.

Key details

• •According to the Bureau of Labor Statistics, the 29,000 new jobs in September represent a significant decrease from the revised 133,000 positions added in August, as reported by BBC News.
• •NPR reports that job gains for July and August were revised downward by a total of 60,000 positions.
• •CME's FedWatch tool indicates the probability of a Federal Reserve interest rate hike in October has dropped to 17%, down from 36% the previous week, according to International.
• •Economists cited by BBC News, including Bradley Saunders of Capital Economics, attributed some of the softness to a decline in government roles and changes to temporary visa policies.
• •Polling data cited by BBC News shows public approval of President Trump's handling of the economy and cost-of-living issues at 26% and 17%, respectively, marking new lows.

Background

The Federal Reserve raised interest rates at its September meeting to address inflation that has remained above target for five years. This week, the release of the personal consumption expenditures price index, the Fed's preferred inflation gauge, showed core prices rose 3% in August, falling below consensus estimates of 3.3%.

Why it matters

The labor market data has caused traders to lower their expectations for interest rate hikes in October, though forecasts for a December hike remain higher. The economic climate presents a challenge for Republicans with congressional midterm elections approaching in one month.