US job growth rebounds in September, but unemployment edges higher

US job growth rebounds in September, but unemployment edges higher

US employers added **119,000 jobs** in September-more than double analysts' forecasts-yet the unemployment rate rose slightly to **4.4%**, according to the Labor Department's long-delayed report released Thursday. The data, held back by the month-long government shutdown, offers a mixed but cautiously optimistic snapshot of a labor market under strain.

Shutdown delays cloud economic outlook

The report, originally scheduled for early October, was postponed due to the federal government shutdown, which ended last week. The delay left policymakers without critical labor market data during a period of heightened economic uncertainty. While September's hiring surge exceeded expectations, revisions showed weaker growth in prior months: **72,000 jobs added in July** (down from earlier estimates) and a net **loss of 4,000 jobs in August**.

Economists warn the next report, covering November and due in mid-December, may reflect further weakening, particularly from temporary government layoffs tied to the shutdown. "The September jobs report may be backward-looking but offers reassurance that the labor market wasn't crumbling before the shutdown," said Nancy Vanden Houten, lead economist at Oxford Economics. She cautioned, however, that October's data will likely show a "softer" trend.

Fed faces divided path on rate cuts

The Federal Reserve, which has already cut interest rates twice since September to a range of **3.75%-4.0%**, now faces a dilemma. While job growth remains sluggish since April, inflation ticked up to **3%** in September-above the Fed's 2% target. Policymakers are split over whether further cuts are needed to stimulate hiring or if they risk reigniting price pressures.

"When you're driving in a fog, you slow down," said Art Hogan, chief market strategist for B. Riley Wealth, echoing Fed Chair Jerome Powell's recent caution. "The Federal Reserve is still driving in a fog."

Powell signaled last month that a December rate cut is "far from" guaranteed, describing the job market as showing "very gradual cooling" but no sharp decline. The Fed's next meeting, set for December, will proceed without October's labor data, complicating decisions.

Sector disparities and long-term job seekers struggle

Job gains in September were led by **healthcare, restaurants, and bars**, while **transportation, warehousing, manufacturing, and government** sectors shed positions. A troubling trend emerged among college-educated workers: their unemployment rate rose to **2.8%**, up from **2.3%** a year ago-a rare spike for a typically resilient demographic.

Long-term unemployment has also crept upward, with the ranks of those jobless for **over six months** swelling this year, though September saw a slight dip. Mason Leposavic, a 24-year-old graduate of Rochester Institute of Technology, exemplifies the challenge. After applying to "thousands" of jobs since May 2024, he secured only part-time work as a bartender before relocating to Arizona to live with his mother. "I didn't realize how hard it would be," he said. "I think everything really changed after AI, especially in the tech industry."

Layoffs surge amid economic pressures

Corporate cutbacks are mounting. A report by outplacement firm Challenger, Gray & Christmas found October job cuts hit their highest level for the month since **2003**, with high-profile layoffs at **Amazon, Target, and UPS**. On Thursday, **Verizon announced 13,000 job cuts**, citing "changes in technology and in the economy." Despite these reductions, broader deterioration remains unclear: weekly unemployment benefit claims have stayed stable, suggesting no widespread collapse in hiring.

Businesses are grappling with a trifecta of challenges: **government spending cuts, new tariffs, and waning consumer demand**. Executives from **McDonald's, Coca-Cola, and Chipotle** recently warned that lower-income households are pulling back on spending as inflation squeezes budgets. Meanwhile, a buoyant stock market-fueled by strong corporate earnings-has propped up higher earners, deepening the economic divide.

What's next: A December reckoning

The Fed's December meeting will hinge on fragmented data. With October's figures missing and November's report not due until mid-December, policymakers may opt for caution. Analysts suggest the mixed signals-stronger-than-expected September hiring but persistent weak spots-could prompt the Fed to **hold rates steady** rather than risk overstimulating an economy still grappling with inflation and structural shifts like **AI-driven automation** and **immigration crackdowns**.

"It's been pretty challenging," Leposavic said of his job search. "You see the same postings reposted over and over, and you realize: they're not hiring. They're just required to list it."