The numbers: The increase in new U.S. jobs fell to a 17 month low of 263,000 in September, reflecting ongoing labor shortages and waning demand for new workers as talk of a recession grows.
The increase in hiring was the smallest since April 2021 and fell slightly short of Wall Street estimates. The Wall Street Journal asked economists for 275,000 new jobs.
The unemployment rate fell to 3.5% from 3.7% on Friday, the government said. That puts it back at a pre-pandemic low and marks one of the lowest rates since the late 1960s.
The U.S. stocks were not changed in premarket trades after the report.
The US recovered all the 22 million jobs lost during the Pandemic just two months ago, but now it faces a new challenge from a weaker economy.
The Fed is putting up interest rates to squash the highest inflation in 40 years, a strategy that is bound to slow economic growth and increase unemployment. Many economists predict a recession will take place next year, and Fed officials won't rule out one out.
I hope that's the answer. We are going to try to avoid a recession Minneapolis Federal ReserveFederal Reserve President Neel Kashkari said on Thursday. The September jobs report shows that the labor market is cooling off enough to reduce the downward pressure on inflation, but senior Fed officials aren't going to be assuaded.
One of the biggest concerns of the Fed is rising wages spurred by the tightest labor market in modern times. Hourly pay increased by 10 cents to $32.46 in September. The rise in pay over the past year slowed to 5% from 5.2%, but it remains one of the fastest increases since the early 1980s.
The Fed is expected to raise rates until inflation starts to fall quickly and the mismatch between too few workers and too many open jobs eases up.
There was little progress on that front in September's employment report. The participation rate - the share of working-age people in the labor force - fell to 62.3%.
There have been reports in recent days that the hiring is being tapered off.
Since fall, job openings fell to the lowest level and layoffs, while still quite low, rose to an 18 month high in August. The new unemployment filings went up to a five-week high last week.
The economy is losing momentum. The housing market has been slammed by higher interest rates and pushed mortgage rates to almost 7%. The cost of borrowing new cars, such as new cars, is discouraged by higher rates.
The businesses are getting the hint. Some are already scaling back plans to hire or invest in anticipation of the economy slowing further.
The question is whether the US will go through with a second recession in four years. Many economists think it is inevitable.
The evidence is pretty convincing that we are heading for a recession," said Dan North, senior economist at Allianz Trade North America.
Market reaction: The Dow Jones Industrial Average DJIA and the S&P 500 SPX were set to open mixed in Friday trades. The yield on the 10 year Treasury note BX: TMUBMUSD 10 Y was up to 3.84%.