In September, the U.S. non-farm payrolls added 119,000 jobs, significantly exceeding expectations, while the unemployment rate unexpectedly rose to 4.4%, reaching a four-year high

The U.S. Bureau of Labor Statistics released the September non-farm report that was supposed to be published last month on Thursday. Analysts say the employment data sends contradictory signals: on one hand, the number of jobs exceeded expectations, while on the other hand, the unemployment rate unexpectedly rose to a four-year high.

According to the report, the U.S. non-farm employment increased by 119,000 in September, more than double the expected 51,000, but at the same time, the number of jobs added in August was revised down from an increase of 22,000 to a decrease of 4,000, and the total non-farm employment for July and August was revised down by 33,000, continuing this year's pattern of "continuous downward revisions."

The U.S. unemployment rate in September was 4.4%, higher than expected and the previous value of 4.3%, the highest since October 2021, mainly due to the rise in the unemployment rate among Black Americans.

The average hourly wage in the U.S. increased by 3.8% year-on-year in September, with expectations for it to remain flat at 3.7% from the previous month. Month-on-month, it was 0.2% lower than expected, with the increase slightly narrowing from the previous month's 0.3%.

The labor market still shows an unbalanced situation

This non-farm data was originally scheduled for release on October 3 and is the first major data to be delayed during the recent U.S. government shutdown. However, since the Bureau of Labor Statistics had completed data collection before the government shutdown began on October 1, this report also became one of the earliest released data after the government reopened.

The rise in the unemployment rate to 4.4% is partly due to the labor force participation rate unexpectedly rising to 62.4%, the highest level since May, marking the second consecutive month of increase.

The number of employed persons based on household surveys increased by 251,000. The labor force grew by 470,000, reaching a historic high of 171.2 million.

Analysts believe that since the month-on-month wage growth rate is slightly lower than expected, overall, the data appears weak and may not be sufficient to change the Federal Reserve's assessment of labor market risks, as the rebound in labor force participation seems difficult to sustain. In addition, the rapid proliferation of artificial intelligence is also weakening labor demand, with entry-level positions being hit the hardest, leading to many recent college graduates struggling to find jobs. Economists indicate that AI is driving a form of "jobless growth" in the economy.

Some economists attribute the issue to the trade policies of the Trump administration, arguing that such policies have created high uncertainty, suppressing hiring capabilities for businesses, especially small enterprises. Earlier this month, the U.S. Supreme Court held debates on the legality of tariffs imposed by Trump under the International Emergency Economic Powers Act (IEEPA) of 1977, with several justices questioning whether the president possesses such tariff authority.

From the perspective of employment composition, the professional and business services sector has experienced the largest job losses, while the education and health services sector, as well as the leisure and hospitality industry, have seen the most significant job growth. Specifically, the healthcare sector added 43,000 jobs in September, which is consistent with the average monthly increase of 42,000 over the past 12 months. The food and beverage service industry continued to show growth in September, adding 37,000 jobs. The social assistance sector is also expanding, with an addition of 14,000 jobs, of which personal and family services saw job growth reaching 20,000.

In contrast, the transportation and warehousing sector saw a reduction of 25,000 jobs in September, primarily due to a decrease of 11,000 jobs in warehousing and storage, as well as a reduction of 7,000 jobs in courier and delivery services. Federal government employment also continued to decline in September, decreasing by 3,000, with a cumulative reduction of 97,000 since reaching a peak in January. As for other major sectors, including mining, quarrying, oil and gas extraction, construction, manufacturing, wholesale and retail trade, information industry, financial activities, professional and business services, and other service industries, the employment levels in September showed little significant change, remaining relatively stable.

Manufacturing employment has declined for the sixth consecutive month.

Analysis indicates that this lagging data (including a downward revision of 4,000 jobs in August) shows an imbalanced state of the U.S. labor market as it approaches the end of the year. Previous reports indicated weak job growth in an environment of "low hiring and low layoffs." Subsequently, the emergence of large-scale layoff announcements has intensified public concerns about job security in the U.S.

The last employment report before the Federal Reserve's December meeting

It is noteworthy that this will be the last employment report the Federal Reserve will see before its meeting on December 9-10. Analysts suggest that due to the lack of complete economic indicators, the Federal Reserve has already cut interest rates consecutively in September and October, but decision-making in December has become more challenging With the unemployment rate rising in September, the market expects the probability of a rate cut in December to increase further.

The Bureau of Labor Statistics announced on Wednesday that the October employment report, originally scheduled for release on November 7, will be canceled, and the relevant data will be incorporated into the November report. The November report will be released on December 16, meaning Federal Reserve officials will not have access to the latest employment data at this meeting.

Officials are divided on whether the slowdown in the labor market is sufficient to support further rate cuts. Chair Jerome Powell stated last month that a rate cut in December is "far from a done deal"; the minutes from the October meeting indicated that "many" policymakers were inclined to oppose another rate cut. The market had previously widely believed that the Federal Reserve would likely remain on hold for the remainder of the year.

Daniel Zhao, Chief Economist at Glassdoor, stated:

"The September employment report shows that the labor market remains resilient before the government shutdown, with job numbers exceeding expectations. However, the overall situation remains unclear, as August data was revised to negative growth, and the unemployment rate has also risen. These data reflect the situation two months ago and do not capture our current state in November."

After the report was released, U.S. Treasury yields fell, and the S&P 500 index opened higher.

Seema Shah, Chief Global Strategist at Principal Asset Management, stated:

"Although this employment report is very lagging, it still drives market volatility. The stock market likes employment data that exceeds expectations because it shows the economy remains robust; while the bond market prefers rising unemployment rates and slowing wage growth, as this may keep the possibility of a rate cut in December alive."

Another report released on Thursday showed that for the week ending November 15, the number of Americans filing for first-time unemployment benefits fell to a three-week low, according to the Labor Department; the number of continuing claims for unemployment benefits (i.e., the scale of those currently receiving benefits) rose to the highest level since the end of 2021.

October and November Employment Data Will Not Include Unemployment Rate

The Bureau of Labor Statistics announced on Wednesday that important statistical indicators, including the unemployment rate, will not be included in the October and November employment data to be released on December 16. Due to the prolonged government shutdown in the U.S., the household survey responsible for this data could not be conducted, and the Bureau of Labor Statistics stated that it cannot retroactively collect this data.

Analysts believe that given the significant slowdown in immigration to the U.S. this year, the household survey could have more clearly reflected structural changes in the U.S. labor market. The labor force participation rate in September—the proportion of the employed or job-seeking population to the total population—rose to its highest level in four months, driven by women. The participation rate for workers aged 25 to 54 (the prime age group) remained at a one-year high.

At the same time, after a surge in part-time employment in August (with full-time employment declining), September saw the exact opposite: a significant increase in full-time employment and a decline in part-time employment, marking the largest drop in a year; the proportion of long-term unemployed decreased; however, the number of permanently unemployed rose to the highest level since the end of 2021

At the same time, the monthly increase in average hourly wages is the smallest since June. Economists closely monitor this indicator as it is a key driver of household spending, and in the current environment of increasingly differentiated consumption, the wealthiest Americans contribute nearly half of total consumption.

Media analysis indicates that looking ahead, although the employment figures for October will eventually be released, they may not necessarily reflect the true situation. Economists expect a significant decline in government employment numbers, as federal employees participating in the government's "delayed resignation" program will officially exit the payroll in October