Reaction roundup: Experts, analysts weigh in on September jobs report

 Wall Street’s focus on Friday was on the September nonfarm payrolls report which showed significantly weaker-than-expected job growth, prompting traders to pare their expectations of a Federal Reserve rate hike later this month. 

As per the U.S. Bureau of Labor Statistics, nonfarm payrolls rose 29k last month, significantly lower than the estimated figure of 89k. The monthly growth was the slowest of the year. Moreover, nonfarm employment in July and August combined were revised down by 60k. Meanwhile, the unemployment rate ticked up to 4.2% in September from 4.1% in August.

The data comes at a time when separate indicators have suggested a resilient U.S. economy and a slight moderation in stubbornly high inflation. Any signs of labor market weakness in such a scenario means a central bank would typically hold interest rates steady, as tightening policy can quell price pressures but at the risk of further denting economic growth and labor activity.

The reaction in Fed October rate expectations reflected the same. As per the CME FedWatch tool, the odds of a quarter-point rate hike later this month fell to nearly 22% while those of the central bank holding rates steady surged to about 78%.

Wall Street and the U.S. Treasury bond market caught a bid after the jobs report. The enthusiasm faded slightly later in Friday’s session, with U.S. stocks paring some gains and yields rising again. The 10-year Treasury yield was last up 3.4 basis points to 5.272%. 

Here are some popular exchange-traded funds that track the benchmark S&P 500 index: SPDR S&P 500 ETF Trust, Vanguard S&P 500 ETF, and iShares Core S&P 500 ETF.

See below for various reactions to the jobs data:

Dan Alpert, executive chairman at Westwood Capital:

“This was a miss that will take pressure off the Fed and the bond market. Equities rallying on bad news = good news.”

Michael Feroli, chief U.S. economist at JPMorgan:

“Nonfarm employment increased only 29,000 last month, and the gains for the prior two months were revised down by a net 60,000. That left the 3-month average gain at 51,000 last month, which is close to most estimates of trend monthly growth in the labor supply, i.e. breakeven job growth.

Wage growth has been decelerating, a trend which continued last month as average hourly earnings were up only 0.1% for the month and 3.0% over a year ago. That deceleration should give comfort to Fed policymakers that the economy is not overheating in a way that calls for a hurried rate hike cycle.

It would now take a very strong CPI to make the October meeting live. We continue to look for another hike at the December FOMC meeting, on the assumption that the September and October price reports show still-sticky trends in core inflation.”

Jeffrey Roach, chief economist at LPL Financial:

“We are seeing the tension between the goods-producing sectors that support the AI boom and the services-producing sectors that are feeling the impact of technological change. Given the overall softness of the labor market, the likelihood of two Fed hikes is getting lower.”

Jamie Cox, managing partner at Harris Financial:

“There is zero chance for a rate hike in October now—in retrospect, September should have been a hold. Outside of energy, the inflation impulse is lower, and Fed was zigging when it should have been zagging.”

Diane Swonk, chief economist at KPMG U.S.:

“The Fed is (expected) to skip a rate hike in October and resume hikes in December. They are trying to prevent a larger blow to the labor market and engineer a softer landing. Still, the inflation data going into the October meeting will be ugly and hot due to the resurgence of energy prices. Elevated diesel prices could have a long tail, given the loss in global refining capacity due to the war in Ukraine and conflict in the Middle East.”

Joseph Brusuelas, principal and chief economist at RSM US:

“The low hire, low fire U.S. jobs market remains our baseline forecast and one should anticipate the soft pace of hiring to continue going forward. Statistically insignificant noise is the primary reason for the modest uptick in unemployment and full employment remains the best description of the American labor market currently.

The soft pace of hiring and noise around the size of the domestic labor force should support those at the Federal Reserve looking to keep the federal funds policy rate on hold at the upcoming October meeting. The September data implies little to no risk of second round wage induced inflation and the fact of the matter is that the Fed is simply not worried about the employment side of their mandate at the current time.

Our baseline call on the direction of monetary policy remains no hike in October and one twenty-five basis point hike in December and then another in March of 2027.”

Justin Wolfers, professor of public policy and economics at the University of Michigan:

“An all around weak -- but not tragic -- payrolls report for September.”