Unemployment Rate Fell To 3.5% In September As Labor Market Added 263,000 Jobs

Topline

The unemployment rate unexpectedly fell last month as the economy added another 263,000 jobs—signaling the labor market, which has remained one of the economy’s strongest pillars during the pandemic recovery, may not be cooling quickly enough for the Federal Reserve to ease up on interest rate hikes meant to combat inflation by slowing down the economy.

Workers assemble cars at a Ford Assembly Plant in Chicago.

AFP via Getty Images

Key Facts

Job gains in September were slightly lower than the 275,000 new jobs economists were expecting, according to data released Friday by the Labor Department; notable job gains occurred in healthcare, leisure and hospitality, the government said.

Meanwhile, the unemployment rate fell to 3.5%—coming in lower than expectations calling for it to remain flat at 3.7%—as the number of unemployed people dipped to 5.8 million from 6 million in August.

Key Background

Despite widespread reports of layoffs at giant corporations, the job market has remained one of the economy’s strongest pillars this year, and Fed officials have long pointed to the strength as evidence the economy can withstand additional rate hikes. According to Challenger, U.S. employers have announced plans to cut nearly 210,000 jobs this year, marking the lowest total for the period since at least 1993. However, recent data have signaled things may be changing. Hiring intentions, which measure the number of new jobs employers plan to add, fell to their lowest level since 2011, according to career services firm Challenger on Thursday. Meanwhile, new jobless claims jumped 15% to 219,000 last week, coming in higher than projected and ending a ten-week streak of better-than-expected data.

This is a developing story. Please check back for updates.

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