US economy added 29,000 jobs in September: BLS

The U.S. economy added 29,000 jobs in September, according to new data released Friday by the Bureau of Labor Statistics (BLS).

The unemployment rate also ticked up slightly to 4.2 percent, the BLS reported.

The economy added 162,000 jobs in August , after employers added 31,000 and 21,000 jobs in June and July, respectively. But BLS revised the past two months downward on Friday, now showing the market losing 10,000 jobs in July and adding 133,000 in August.

The latest jobs report “raises questions about the durability of the labor market after the Federal Reserve’s first interest rate increase since 2023,” Jerry Tempelman, vice president of economic and fixed income research at Mutual of America Capital Management, said in a statement.

The Federal Reserve hiked interest rates by a quarter point last month, marking its first rate increase in more than three years amid concerns about inflation.

Tempelman warned that the uptick in the jobless rate “warrants close attention, as rising joblessness in tandem with softer hiring could signal that the Fed’s tightening cycle may at some point constrain economic activity more meaningfully than anticipated.”

The unemployment rate has remained below 5 percent since August 2021, after it spiked to a peak of 14.8 percent in the early stages of the COVID-19 pandemic — the highest mark since the Great Depression .

Inflation, meanwhile, has remained above the Fed’s 2 percent target for more than five years, rising in recent months amid energy shocks from the Iran war .

Annual inflation, as measured by the personal consumption expenditures (PCE) price index, was 3.4 percent in August , down from 3.7 percent in July , the Bureau of Economic Analysis reported Wednesday .

Core prices, which do not include more volatile food and energy costs, were up 3 percent year over year last month, as measured by the PCE, the Fed’s preferred measure of inflation.

Fed Chair Kevin Warsh said last month the unemployment rate is “running consistent with full employment,” adding the central bank’s dual mandate of maximum employment and price stability is not at odds in the “medium” term.

“Economic growth — that is ensuring continuous, sustainable, durable, economic growth — that’s the business we’re in,” the Fed chair told reporters after the central bank raised rates.

“And the job we did today, the job we’ll continue to do, is to ensure price stability, which can mean that sustainable, durable, economic growth can go on for longer,” Warsh added.

Traders are pricing in a roughly 72 percent chance of the Federal Open Market Committee (FOMC) holding interest rates at a range of 3.75 percent to 4 percent at its next meeting , set for Oct. 27-28, according to the CME FedWatch tool .

“A softer-than-expected jobs report should put an October Fed hike firmly on the back foot,” Seema Shah, chief global strategist at Principal Asset Management, said in a statement. “Weaker payrolls, softer wage growth and a higher unemployment rate all point to a labour market that’s cooling rather than reaccelerating.”

Multiple FOMC officials have recently forecast future rate hikes , while noting they will continue to monitor incoming economic data.

“As always, I’ll be watching the data and listening closely to what businesses and workers are telling me,” Anna Paulson, the president of the Federal Reserve Bank of Philadelphia and a member of the FOMC, said last week .

“But let me be clear: Returning inflation to 2 percent is nonnegotiable, and I will support the policy path that gets us there while carefully weighing risks to the labor market along the way,” Paulson added.

Shah suggested the “decisive release” will come later this month with the consumer price index (CPI), a popular measure of inflation.

She also noted that “today’s data argues for patience, not panic.”

“The Fed needs to see a reacceleration in inflation, not just resilience in growth, to justify another hike this year,” Shah continued.

Adam Schickling, a senior economist for Vanguard, similarly said Friday’s jobs report “strengthens the case for the Federal Reserve to remain patient.”

“The labor market has not deteriorated sharply, but there is also little evidence that it has meaningfully strengthened, giving policymakers reason to wait for additional data,” he added in a statement.

The rate-setting panel’s next meeting will take place less than a week before the midterm elections, with President Trump and the GOP fighting economic headwinds and political history in a bid to prevent Democrats from snatching control of Congress.