U.S. September Payrolls Miss Forecasts as Unemployment Rises to 4.2%

Payroll shortfall and rising unemployment

The Labor Department’s Nonfarm Payrolls Report released Friday showed the U.S. added 29,000 jobs in September, a stark miss of the 90,000 consensus forecast and down from August’s revised gain of 133,000. The unemployment rate rose to 4.2%, versus the 4.1% expected and unchanged from August. July’s earlier gain of 21,000 jobs was also revised to a loss of 10,000, highlighting a broader downward trend in the data series.

Market response across asset classes

In the minutes after the release, Bitcoin traded just under $87,000, up about 2% for the day, while Nasdaq futures rose 1.2%. Treasury yields slipped, with the 10-year yield down 7 basis points to 5.17% and the 2-year to 4.71%. Gold posted a gain of more than 1%, and the U.S. dollar weakened against major currencies.

Wage growth lagging expectations

Average hourly earnings increased 0.1% in September, missing the 0.3% forecast and falling short of August’s 0.3% rise. On a year-over-year basis, earnings were up 3%, below the 3.2% consensus and the 3.1% recorded in August. The modest wage growth further tempers the inflation outlook.

Our read: The combination of a sharply weaker payroll figure, a modest uptick in unemployment, and tepid wage growth may give the Federal Reserve room to pause rate hikes, even as inflation remains elevated. Crypto markets reflected limited risk-off pressure, with Bitcoin maintaining gains while traditional safe-haven assets rallied.