US Jobs Growth Slows Sharply In September As Unemployment Rate Rises To 4.2%

The U.S. economy added a paltry 29,000 jobs in September, far below the forecasted 90,000, according to the latest non-farm payrolls report. The unemployment rate, however, climbed to 4.2% from 4.1% in August, signaling a slowdown in labor market expansion as the Federal Reserve prepares to meet on policy.

Earlier reports had revised downward the job gains for July and August by a combined 60,000, suggesting the slowdown in hiring extends beyond September. Unemployment has hovered between 4.1% and 4.3% since March, indicating the labor market is weakening without a sharp spike in joblessness.

The tepid employment data is significant as it precedes the November midterm elections, with investors closely monitoring the figures for hints at the Federal Reserve's stance on interest rates. The weaker-than-expected numbers may dampen expectations for additional rate hikes, though inflation remains a key concern for policymakers.

This led to a decrease in market expectations for another Fed rate increase, with the 10-year Treasury yield dropping to around 5.18% and the two-year yield falling to about 4.72%. The two-year yield is particularly significant as it reflects expectations for Fed policy.

Oil prices also softened following the employment data, with Brent crude falling below $100 a barrel. Traders assessed the U.S. economic outlook alongside tensions in West Asia and potential additional crude and diesel stock releases in Europe.