U.S. job growth accelerated in September even as the job market cooled due to rising unemployment.
Nonfarm payrolls increased by 119,000 jobs after a downwardly revised 4,000 decrease in August, according to a Bureau of Labor Statistics (BLS) report released Thursday.
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The unemployment rate was 4.4%, up from 4.3% in August.
The largest increase was in the health care sector, with a total of 43,000 jobs in September. The food and beverage services sector followed, adding 37,000 jobs, and social assistance employment increased by 14,000.
Other sectors such as construction, wholesale trade, retail services, professional services and business services saw little change.
The federal workforce has shrunk by 3,000, with 97,000 jobs cut from the nation’s largest employer since the start of the year. Transportation and warehousing, an industry hit hard by the tariffs, also fell, with 25,000 jobs lost in September.
Average wages increased by 0.2% (9 cents) to $36.67.
Government shutdown hurdles
The September employment report was originally scheduled to be released on October 3, but was postponed due to the US government shutdown. Employment statistics are typically released on the first Friday of each month. Due to the 43-day government shutdown, the U.S. Department of Labor was unable to collect the data needed to calculate the unemployment rate for October.
Nonfarm payrolls for October will be released as part of the November employment report, which will be released on December 16th.
Heading into the economic data blackout, the BLS estimated that about 911,000 fewer jobs were created in the 12 months ending in March than previously reported. A decline in the number of immigrant workers entering the U.S. for work, a trend that began in the final year of former U.S. President Joe Biden’s term and accelerated under President Donald Trump, is depleting the labor supply.
“Today’s delayed report shows worrying signs that the top-line numbers are falling short,” said Alex Jacques, policy director at the economic think tank Groundwork Collaborative. “Every month, the Trump economy is shedding jobs, increasing insecurity, and reducing pathways for families to get ahead,” said Alex Jacques, director of policy at the Groundwork Collaborative, an economic think tank.
Economists estimate that the economy currently only needs to create between 30,000 and 50,000 jobs per month to keep up with the growing number of working-age people (about 150,000 in 2024).
What is behind the slowdown in growth?
The growing popularity of artificial intelligence is also eroding labor demand, with most blockbusters filling white-collar, entry-level jobs and crowding new graduates out of the workforce. Economists said AI is driving economic growth for the unemployed.
Some accused the Trump administration’s trade policies of creating an uncertain economic environment and hampering the ability of businesses, especially small and medium-sized businesses, to hire.
The U.S. Supreme Court heard arguments earlier this month over the legality of President Trump’s import tariffs, with the justices questioning Trump’s authority to impose the tariffs under the International Emergency Economic Powers Act of 1977.
Despite employment statistics remaining positive, some sectors and industries are seeing job cuts. Some economists say the September employment report could still influence interest rate decisions at the Federal Reserve’s December 9-10 policy meeting.
U.S. central bank officials are not expected to receive the November report at this meeting, as the release date has been pushed back from Dec. 5 to Dec. 16. Minutes from the Fed’s Oct. 28-29 meeting released Wednesday showed many policymakers warned that further lowering borrowing costs risks undermining efforts to curb inflation.
