The government released the much-awaited September jobs report yesterday, and it sent mixed signals.
The economy added 119,000 nonfarm jobs in September, more than double the expected 50,000, according to the Wall Street Journal polls. It is also the strongest gain in the last five months. Yet the unemployment rate rose to 4.4%, its highest level in four years.
The Bureau of Labor Statistics report came two months late due to the government shutdown. According to the data, 470,000 people entered the labor force, but only 251,000 found work. This gap shows that hiring is improving, but not fast enough to absorb new job seekers.
Revised data show that hiring in July and August was weaker by 33,000 jobs.
Healthcare led the surge with 43,000 new jobs, especially in hospitals and outpatient clinics. Restaurants and bars added 37,000 positions, helping leisure and hospitality grow by 47,000 jobs. Retailers also expanded payrolls.
However, transportation and warehousing dropped more than 25,000 workers, and manufacturing cut another 6,000 jobs.
Employers say import tariffs and AI adoption are limiting hiring, especially in entry-level roles, pushing more young and recent graduates out of the market.
Business leaders warn layoffs may rise as demand cools. Amazon has already announced 14,000 job cuts.
Despite the rise in unemployment, wages climbed 3.8% over the past year, supporting consumer spending.
Will the Fed cut rates?
Delayed data is one of the most important pieces of information the Federal Reserve uses to decide on interest rates.
The mixed data have divided economists: some argue rising unemployment justifies a rate cut, while others believe strong job gains could prompt the central bank to hold them steady.
Overall, analysts say the labor market isn’t collapsing; it's adjusting to technology and shifting trade pressures.
The bank may also consider the thousands of recent private sector layoffs. Consumer sentiment has also been declining, which prompted Home Depot and Target to cut their profit forecasts.