The US economy added only 29,000 jobs in September 2023, well below expectations, as the unemployment rate rose to 4.2%. Wage growth also lagged behind inflation. Federal Reserve officials offered differing views on whether additional interest rate increases were needed, while 10-year Treasury yields hit a 24-year high and average 30-year mortgage rates reached 7.28%.
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Payroll figures released by the Labor Department on Friday showed only 29,000 positions added to the workforce during September, a total that came in at roughly one-third of what analysts had anticipated. Joblessness edged higher to 4.2 percent, a tenth of a point above where it had stood the previous month.
Payroll figures for August were revised down by 29,000 positions, landing at a total of 133,000 once the updated count was applied. Taken together with downward revisions applied to July's figures, the department noted that payroll additions over those two months fell short of earlier estimates by 60,000 positions, with one analyst describing the labour market as holding steady rather than advancing.
Hiring and layoffs alike have remained restrained, leaving the labour market in a state of limited movement in both directions. Ted Rossman, a principal consumer finance analyst at Money Management International, noted that workers are holding onto their positions far more than they are leaving them.
Pay growth came in beneath what analysts had anticipated. Hourly pay rose by five cents across the month, a gain of 0.1 percent, while a 3 percent gain accumulated across the preceding twelve-month period. A 12-month price reading from the Commerce Department landed at 3.4 percent.
Rossman attributed the pattern to limited competition among employers for workers, adding that some businesses may be trying to avoid passing higher costs on to customers by keeping wage growth in check — a view he offered as one possible interpretation rather than a firm conclusion. Separately, market-based forecasts tracked by CME FedWatch pointed to lower odds of a Federal Reserve rate increase at the upcoming end-of-month meeting, a shift that came in the hours after the September employment figures were published.
Softer labour market conditions have raised questions about whether the economy retains enough resilience to absorb a further rate increase aimed at bringing inflation under control. A quarter-point rate increase passed without dissent at the Federal Reserve's meeting the previous month.
Speaking ahead of the September data, Lorie Logan — who leads the Federal Reserve Bank of Dallas — argued that monetary conditions needed to be tightened, noting in a statement that the FOMC had taken a meaningful step at its September gathering by lifting the target range for the federal funds rate by 25 basis points. Logan indicated that, in her view, the target range would need to climb by at least another 50 basis points to bring the outlook and risks into appropriate balance with the dual mandate goals.
In a statement outlining her position, Federal Reserve Vice Chair for Supervision Michelle Bowman noted that further time was needed to assess the downstream effects of September's rate adjustment, adding that a clearer picture of where underlying economic trends and financial conditions are heading would be necessary before drawing conclusions. Bowman conveyed that the available data, taken as a whole, warranted closer examination before any further steps were pursued, and that no pressing case for immediate action had presented itself at that point.
Data from non-profit credit counselling operations, as highlighted by Rossman, point to a widening gap between what clients earn and what they owe. Over a seven-year span, typical client earnings climbed 44 percent while the debt those same clients carried rose by 55 percent, with counsellors now seeing both more people seeking assistance and heavier debt burdens when they arrive.
Ten-year Treasury yields climbed to their highest point in nearly a quarter century during the past few days of trading. Freddie Mac data released Thursday put the typical 30-year fixed-rate mortgage at 7.28 percent, a level not seen in close to three years.