Home / News / World /  US adds 263,000 jobs in Sept, unemployment rate falls to 3.5%

Hiring in the US continued at a solid, yet more moderate pace last month and the unemployment rate slipped two-tenths of a percentage point to 3.5%, indicating the labor market remains tight and has so far proven resilient to steep interest-rate hikes by the Fed. Friday’s US jobs report will give a fresh indication of inflation pressures in the country.

The data showed 263,000 jobs were added in September – the smallest monthly advance since April last year – after a 315,000 gain in August, a Labor Department report showed Friday. The unemployment rate unexpectedly dropped to 3.5%, and average hourly earnings rose firmly.

The steady slowdown in new positions is good news for the US Federal Reserve as it works to cool the economy and tamp down scorching inflation.

"Investors have been looking to pick up bargains. But, as prices move higher there is a visible disinclination to chase. One of the major reasons being the talks around aggressive Fed rate hike decision," said Anand James, chief market strategist at Geojit Financial.

"Nonfarm payrolls data due later brings a very important perspective to Fed's plans. That's also keeping the risk appetite in check," said James.

Traders of futures tied to the Fed's policy rate added to bets today that the US central bank will deliver a fourth straight 75-basis point interest rate hike next month after a closely watched report showed US employers did not slow hiring much, despite sharply higher borrowing costs.

Jobs data key for gauging stocks' recession fear

The US jobs data will be a crucial test of how stock markets are pricing in recession fears, according to BlackRock Inc.

Stocks and bonds have recently moved in tandem, selling off when hotter-than-expected data are seen to strengthen the Fed's case for higher rate hikes.

That relationship could start to break down if cooler jobs figures still trigger a selloff in stocks, signalling recession concerns, said Scott Thiel, chief fixed income strategist at the world’s largest asset manager, told Bloomberg Television.

“If we get a miss or a hit on this number and there’s a divergence in stocks and bonds, that may tell us something about how the market views a recession," said Thiel. If stocks sell off on a miss, “that’s the recession being priced in, I think it’s a really critical moment," he said.

The US Federal Reserve officials have showed no intention of backing down from the most aggressive rate hike campaign in decades, emphasising that the inflation fight was ongoing.

"We are also seeing other inflation trends. Commodities, which have been falling for the last few months, are likely seeing a temporary bottom. There are some signs of firmness in metals as well as oil due to supply side tightness," James said.

Meanwhile, Indian shares ended a tad lower on Friday, weighed by consumer and technology stocks, ahead of the US jobs report. The NSE Nifty 50 index closed down 0.1% at 17,314.65, while the S&P BSE Sensex ended mostly flat at 58,191.29. The rupee sank to a new low against the dollar.

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