US Labor Market Report Surprises with Weak Job Growth

The US labor market report for September has been released, showing fewer job additions than expected. The nonfarm payrolls increased by just 29,000 in September, compared to a predicted 84,000 gain. The unemployment rate rose to 4.2% from 4.1%, while the labor force participation rate edged up to 61.8%. July and August payroll growth were also revised downward, with July's increase downgraded by 31,000 and August's rise reduced by 29,000.

The employment-population ratio stood at 59.2% in September. Mohamed A El Erian, economist and chief economic advisor at Allianz, pointed out the 'surprises' in the report, including low job creation, a rising unemployment rate, and moderate monthly earnings growth of just 0.1%. He noted that this would likely calm expectations about an October interest rate hike by the Federal Reserve.

The weak jobs report triggered a market reaction, with S&P 500 futures rising 0.8%, Dow Jones Industrial Average futures gaining 458 points (or 0.9%), and Nasdaq-100 futures climbing 1.2%. Treasury yields also fell, with the 10-year yield dropping more than 5 basis points to 5.176%.