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The US added 119,000 jobs in September but unemployment reached its highest level in four years, in figures that will complicate the Federal Reserve’s decision on whether to cut interest rates next month.
Thursday’s jobs number was far greater than the expectations of 50,000 new posts among economists polled by Bloomberg. It also contrasted with the 4,000 jobs lost in August after figures for the previous two months were revised lower by a combined 33,000 posts.
The unemployment rate rose from 4.3 per cent in August to 4.4 per cent in September, the highest level since 2021.
The data release is the first indicator of the health of the US economy released by the Bureau of Labor Statistics since a record-length shutdown of the federal government halted publication of official data.
The mixed report sets the stage for a clash between hawkish and dovish members of the Federal Open Market Committee when they meet next month to decide whether to cut interest rates for a third time this year.
“There’s something in this report for everyone — hawks can point to acceleration in hiring, doves can point to the higher unemployment rate,” said Eric Winograd, senior economist for fixed income at AllianceBernstein.
He put the chances of a December rate cut at 50/50 but added that the Fed saw the unemployment rate as the “best barometer of supply and demand in the labour market”.
US President Donald Trump has long campaigned for the Fed to cut rates.
The unemployment rate and hiring figures come from separate surveys carried out by the BLS, one tracking households and the other businesses.
US Treasury yields and the dollar both dipped following the report while stock futures extended gains, with the S&P 500 on course to open 1.6 per cent higher.
The central bank has lowered borrowing costs by 0.25 percentage points twice this year but a deep schism has developed between those in favour of a cut at its December meeting to bolster the labour market and others concerned about the risk of stoking inflation.
Patrick Locke, analyst at JPMorgan, said it was “not easy to know what to make of this report, with conflicting directional moves across underlying indicators”.
“It doesn’t seem as though there’s a smoking gun to lock in a December decision,” he added.
The Fed’s decision-making has been complicated by the shutdown, which has prevented the release of regular economic reports.
The BLS said on Wednesday that it would not release a jobs report for October as the shutdown had stopped it from collecting data for the month. Some data for the period will be included in the November report.
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