• Markets: Balance in all things: Bad news about the labor market was good news for the stock market. Stocks surged yesterday, with Nvidia’s rise pushing the Nasdaq to a new intraday record, following the release of a weak jobs report (more on that below). Falling bond yields and oil prices also helped.
• Stock spotlight: Tesla accelerated after revealing more Q3 deliveries than expected, even if it was still 2% less compared to a year ago.

Work to be done

Illustration: Morning Brew Inc., Joe Raedle/Getty Images

Relatively few Americans had to come up with a fun fact to share with their new coworkers last month. The US added an underwhelming 29,000 jobs in September, the government said yesterday—below the 84,000 that economists surveyed by Dow Jones expected.

Government data released yesterday shows that last month:

• Even healthcare, typically the all-star job-creating industry, disappointed, gaining just 17,000 workers, compared with the 33,000 jobs it added in an average month over the past year.
• Construction and manufacturing added a modest 11,000 and 9,000 jobs, respectively.
• AI-exposed industries like business services and the information sector shed jobs.

The summer’s strong job creation may have been a mirage: Government statisticians revised down July and August jobs numbers by a combined 60,000.

The job market is still chugging along

Though the unemployment rate notched up from 4.1% to 4.2% last month, that’s still low by historical standards. That uptick is largely due to the labor pool growing (the unemployment gauge only includes people working or looking for a job). Economists say fewer new jobs have been needed lately to keep employment stable since the labor pool is stagnating amid President Trump’s immigration crackdown and baby boomers retiring.

But…pay isn’t keeping up with inflation. Yearly wage growth slowed to 3% last month, the lowest rate since the pandemic.

What does this tell the Fed?

It might strengthen the case not to hike rates. Wall Street is betting the anemic hiring numbers will compel Warsh and co. to prioritize employment stability over inflation this month.

The trading odds of another rate hike in October dropped to 20% yesterday, from 24% the day before, per FedWatch. Last month, the Fed hiked interest rates for the first time in three years, citing the need to fight inflation amid a strong labor market.

Looking ahead…this is the last monthly jobs report before the midterm elections in November, in which economic woes are expected to be a major issue.—SK

      

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