US Job Growth Slows Sharply in September, Fueling Inflation Fears
US job growth has slowed down significantly in September, with non-farm payrolls increasing by only 29,000 jobs last month. This is a downward revision from the previously reported surge of 162,000 jobs in August. Economists had forecast a stronger payroll gain of 90,000 after the previous month's unexpectedly high figure.
The Labor Department's employment report attributed the weakness in job growth to seasonal adjustment factors, which can cause payrolls to underperform when the Labor Day holiday falls late in the month. Despite this quirk, there are no signs of a broad increase in layoffs, and first-time applications for unemployment benefits remain at 57-year lows.
However, growing headwinds from the US-Israel war with Iran could start disrupting the labor market by the end of this year and into 2027. Rising energy prices, strained supply chains, and ongoing tariffs are all contributing to these concerns. The Federal Reserve has already raised its benchmark overnight interest rate by 25 basis points to the 3.75 to 4 percent range, and further increases in borrowing costs may be on the horizon.