The U.S. economy created far fewer jobs than expected in September, pointing to a surprising soft spot in the labor market and broader economy.
Nonfarm payrolls rose a seasonally adjusted 29,000 for the month while the unemployment rate increased to 4.2%, the Bureau of Labor Statistics reported Friday. Economists surveyed by Dow Jones had been looking for job growth of 84,000 and an unemployment rate of 4.1%.
In addition to the weakness in September, the August jobs count was revised lower to reflect a gain of 133,000 while July switched from a gain to a loss as payrolls fell by 10,000. The revisions in total showed 60,000 fewer jobs than previously reported.
Market reaction was swift to the report, with traders interpreting the soft jobs numbers as good news as they likely further cemented the Federal Reserve staying put at its October meeting. Stock futures jumped after the release while Treasury yields slumped after recently rising to levels not seen since the early part of the century.
Fed officials more closely watch the unemployment rate than the headline payrolls numbers.
The household survey, which is used to calculate the jobless level, was a bit better than the establishment survey, which is used to derive the payrolls count.
Household employment rose by 78,000 for the month, while the labor force swelled by 485,000 and the participation rate, which counts those working or actively searching for a job as a share of the total labor force, increased 0.2 percentage point to 61.8%, its highest since May.
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