Jobs report to show whether hiring stayed resilient in September

An upcoming jobs report on Friday aims to gauge the economic health of the United States as it battles a surge in inflation triggered by the Iran war seven months ago. This data will be released weeks after the Federal Reserve implemented its first interest rate hike in three years to curb price increases, though this move threatens a potential slowdown in hiring due to the impact of higher borrowing costs on businesses.

The economy has faced challenges in recent months, such as a bond selloff that could raise consumer borrowing costs and a resurgence in oil and gasoline prices. Consumer sentiment recently dipped to near its lowest point in the 74-year history of the University of Michigan's survey.

Despite these obstacles, the labor market has remained resilient throughout this year, and economists anticipate that this trend will persist in September. The consensus among economists is that U.S. employers will have added 84,000 jobs in September, indicating solid performance but a deceleration from the 162,000 jobs added in August.

Historically, the U.S. has added around 80,000 jobs per month over the first eight months of the year, which exceeded the financial services firm Raymond James' forecast of 70,000 jobs added each month during this period.

The surge in gasoline prices and the ongoing Iran war have contributed to a three-year high in inflation. Although inflation eased in the summer, continuous fighting has kept price increases well above pre-war levels. As of August, the annual inflation rate stands at 3.4%, significantly above the Federal Reserve's target rate of 2%. This combination of high inflation and a resilient labor market prompted the Fed to raise interest rates by a quarter of a percentage point last month.

Investors estimate that there is a one in three chance of another interest rate increase in October, suggesting that borrowing costs may rise further within weeks, according to CME Group’s FedWatch Tool, which measures market sentiment. Fed Chair Kevin Warsh recently acknowledged that high and prolonged inflation is a significant concern, stating, "The plain fact is that inflation is too high and has been for too long."

Raising the benchmark interest rate aims to reduce inflation by slowing the economy and dampening demand, but this policy could lead to a contraction in hiring and an uptick in the unemployment rate, although the effects typically manifest after a lag period of several months. Despite these potential drawbacks, the economy remains robust, with GDP growing over three months ending in June, defying expectations of a downturn caused by the Iran war.

Consumer spending, which accounts for approximately two-thirds of U.S. economic activity, increased by 0.6% in August from July, marking the largest monthly rise since March 2025, according to government data released on Wednesday.