According to data released today by the Bureau of Labor Statistics, total nonfarm payrolls increased by 29,000 jobs in September, below market expectations for a gain of 90,000. July and August also saw a combined downward revision of 60,000 jobs. September employment gains were led by healthcare (+17,000) and construction (+11,000). In contrast, financial activities declined by 7,000 jobs. The unemployment rate edged up to 4.2%, against market expectations of 4.1%. Meanwhile, the labor force participation rate continued to recover for the second consecutive month, increasing to 61.8% from 61.6% in August.
The ABA Office of the Chief Economist views this month’s weaker payroll report as evidence that labor market conditions could be softening. Slower hiring and a weakening employment outlook could weigh on household income growth and consumer confidence, potentially dampening demand for both business and consumer credit. While the unemployment rate remains relatively low, a continued deterioration in labor market conditions could lead to some weakening in overall credit performance in the months ahead.
