Fed Rate Hike in October Looks Less Likely After Weak Jobs Report

Coming off an unexpected surge in August, the U.S. labor market stumbled in September, adding just 29,000 new jobs as the unemployment rate edged up to 4.2%. According to the latest report from the Bureau of Labor Statistics, released Friday, economic recovery suffered a setback at the start of fall, with nonfarm payrolls growing by only about a third of economist expectations.These weaker-than-anticipated job numbers make it less likely that the Federal Reserve would opt for another interest rate hike when the Federal Open Market Committee (FOMC) meets on Oct. 27-28.Just minutes after the release, CME FedWatch showed odds rising to 85% that the federal funds rate will hold steady at its current 3.75%-4% range, up from 75% a day ago. The trend was echoed by the prediction marketplace Kalshi.Work sectors that saw the strongest growth last month included health care, which added 17,000 new jobs, along with construction (+11,000 jobs), and manufacturing (+9,000). Meanwhile, financial activities employment continued to lag, shedding 7,000 jobs over the month and 129,000 since a recent peak in May 2025. July was revised down by 31,000 jobs, and the change for August was revised down by ...