Published:
Labor market faltered in September as jobs increased by just 29,000, unemployment rate rose to 4.2%
Nonfarm payrolls rose 29,000 in September (far below the 84,000 forecast) and the unemployment rate increased to 4.2%. Wage growth slipped to its lowest annual level since May 2021; markets interpret the soft labour data as supporting a Fed hold at its October meeting, while also noting revisions to prior months.
CNBC reports that the US labour market weakened in September. Nonfarm payrolls rose by just 29,000 against an 84,000 forecast, while the unemployment rate increased to 4.2%. CNBC also notes that the unemployment rate move was “largely due to an influx of members” into the labour force.
The report includes additional context that matters for policy interpretation: August payrolls were revised lower by 133,000 and July switched from a gain to a loss with payrolls falling by 10,000, implying total revisions of 60,000 fewer jobs than previously reported. It also states that wage growth slipped to its lowest annual level since May 2021, and that job gains were concentrated in health care, construction and manufacturing.
CNBC says markets interpreted the soft payroll print as supportive of the Fed holding rates at its October meeting. It cites CME’s FedWatch tool indicating that the odds of holding steady at the October 27-28 meeting jumped to 82.8%. It further observes that household employment rose strongly, with the labour force increasing and participation rate rising to 61.8%—points that can complicate how “weakness” should be judged by policymakers.
For FX traders, the key watch is how this labour-market message interacts with still-elevated inflation concerns and the Fed’s data dependency. The next round of clues will be whether wages and broader demand indicators continue to cool enough to keep October on hold or whether inflation reasserts itself.
Why this matters for FX
This is useful for FX because it directly changes the outlook for the US policy path by shifting expectations around how much economic cooling the Fed needs to see before loosening. Softer payroll growth and weaker wage dynamics can lower the market-implied probability of an October hike, affecting US yields and the USD via relative interest-rate differentials and broader financial conditions. The main transmission is labour-market and wage signals feeding Fed reaction-function expectations.