US job growth slows in September with 263,000 positions added

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The Fitz-Gerald Group principal Keith Fitz-Gerald and Sarge986 president Stephen Guilfoyle discuss the stock markets volatile reaction to the Fed’s rate hike on ‘The Claman Countdown.’

U.S. job growth slowed for a second consecutive month in September, but hiring remained solid despite growing headwinds from higher interest rates, scorching-hot inflation and mounting recession fears.

Employers added 263,000 jobs in September, the Labor Department said in its monthly payroll report released Friday, slightly topping the 250,000 jobs forecast by Refinitiv economists. It marks the lowest monthly gain since April 2021.

The unemployment rate, meanwhile, unexpectedly dropped to 3.5%, returning to the historic low recorded in July.

While monthly jobs data is always important, the Federal Reserve is closely watching this particular report for signs the labor market is starting to slow down from its frenzied pace as policymakers try to wrestle inflation, which is still running near a 40-year high, back to 2%.

Fed Chair Jerome Powell conceded during the post-meeting press conference in September that higher rates could "give rise to increases in unemployment."

"We think we need to have softer labor market conditions," Powell said. "And if we want to set ourselves up, really light the way to another period of a very strong labor market, we have got to get inflation behind us. I wish there were a painless way to do that. There isn't."

For months, the labor market has remained one of the few bright spots in the economy. But there are growing signs that the labor market is starting to weaken, with a number of major companies, including Alphabet's Google, GE, Apple, Meta and Microsoft, announcing hiring freezes or layoffs in recent weeks.

Jobless claims also increased more than expected last week, with the number of Americans filing first-time unemployment benefits rising to 219,000, a five-week high.

If unemployment benefits continue to climb, it could be a sign that employers are laying off workers as consumers pull back on spending and the economy grinds to a halt. Other data published this week shows that job openings plummeted to the lowest level since early in the pandemic, indicating that employers are putting hiring on the back burner.

This is a developing story. Please check back for updates.