U.S. employers added 29,000 jobs in September as the unemployment rate rose to 4.2 percent from 4.1 percent in August. The Bureau of Labor Statistics reported the figures alongside data showing consumer prices increased 3.4 percent year-over-year in August.

The economy expanded at a 2.2 percent annualized pace during the second quarter from April through June. This growth rate decelerated from the 2.5 percent pace recorded in the first quarter from January through March. The Labor Department revised combined July and August payrolls down by 60,000 jobs. August nonfarm payrolls were specifically revised to 133,000.

Average hourly wages increased 3 percent year-over-year in September. This represents the smallest gain since May 2021. The Bureau of Labor Statistics reported that the U.S. labor force participation rate increased to 61.8 percent in September. This is the highest level since May. Consumer confidence declined sharply as the Conference Board Consumer Confidence Index fell 6.7 points to 81.9 in September from 88.6 in August. The survey write-in responses were collected from September 1-23. The September reading of 81.9 is the lowest since April 2014.

Borrowing costs continued to rise as the average 30-year fixed-rate mortgage increased to 7.28 percent from 7.03 percent the previous week. Mortgage rates have increased for six consecutive weeks. The average 30-year fixed-rate mortgage reached 7.29 percent on November 22, 2023. The current rate of 7.28 percent is the highest it has been since that date. The average 15-year fixed-rate mortgage was 5.55 percent one year prior.

Job openings decreased to 7.08 million in August from a revised 7.34 million in July. This figure was below the forecasted 7.2 million. U.S. job openings in August were the lowest since March, when they hit 6.9 million. The JOLTS report showed layoffs fell in August. The number of people quitting their jobs was little changed in August. The JOLTS measure of gross hiring ticked up modestly in August.

Consumer prices rose 0.3 percent month-over-month in August, up from 0.1 percent in July. Core inflation, excluding energy and food, rose 3 percent year-over-year in August. Consumer spending increased at a 3.8 percent annualized pace in the second quarter, up from 0.7 percent in the first quarter. The Commerce Department's previous estimate for second-quarter GDP growth was 1.5 percent.

Average monthly job creation was 166,000 in 2023 and 2024. This is higher than the 29,000 jobs added in September. Average monthly job creation was 491,000 during the 2021-2022 period. Financial markets reacted positively as the S&P 500 rose to within 0.8 percent of its record high set in August. The Dow Jones Industrial Average rose during the week. The Nasdaq Composite also rose during the week.

What's New

In September, the Conference Board Consumer Confidence Index fell below 85, marking its lowest level since April 2014. The JOLTS report for August showed that job openings decreased to 7.08 million, the lowest level since March, when they hit 6.9 million, indicating a cooling labor market.

The Conference Board's Present Situation Index fell to 109.3 in September, its lowest level since December 2024, reflecting worsening consumer perceptions of current business and labor conditions. The Conference Board's Expectations Index fell to 63.6 in September, the lowest level since February 2023, showing that consumers are increasingly pessimistic about future economic conditions.

The Bureau of Labor Statistics (BLS) reported that the U.S. labor force participation rate increased to 61.8% in September, the highest since May. The average 30-year fixed-rate mortgage reached 7.28% in late September, up from 7.03% the prior week, reflecting tighter credit conditions and higher borrowing costs for homebuyers.

Why It Matters

The combination of slowing job growth, rising unemployment, and falling consumer confidence signals a shift in the labor market. Job openings have decreased to their lowest level since March, while mortgage rates have climbed for six consecutive weeks to levels not seen since late 2023.

Consumer spending, which accounts for about 70 percent of U.S. economic activity, grew at a 3.8 percent annualized pace in the second quarter. However, the decline in the Expectations Index to its lowest level since February 2023 suggests households are becoming more cautious about future economic conditions with persistent inflation and higher borrowing costs.