The US labor market was more resilient than expected in September, confirming moderate employment growth, but also a rising unemployment rate. This has strengthened expectations of further rate cuts by the Federal Reserve in 2026, but is also compatible with the expectation of a stalemate in December. The results of the Job Report were greeted with some optimism by the stock market, which accelerated, while Treasury yields fell on the bond market.
The results of the Job Report
According to the report published by the US Bureau of Labor Statistics, the US economy created 119,000 jobs in September, significantly higher than expectations, after showing a change of only 4,000 jobs lost in August following a downward revision of the preliminary estimate. Consensus estimates for September were 50,000 units. The July total was also revised downward to 72,000, a decrease of 7,000 units from the previous release
The unemployment rate, however, rose slightly to 4.4%, the highest level since October 2021, also including part-time work and those who are not looking for work (unemployed). Average hourly earnings increased 0.2% in the month, compared to a consensus of 0.3%, and 3.8% from a year earlier versus an expectation of 3.7%.
Overall, the Job Report shows that the job market entered the fall months on much the same footing as the rest of the year: a slow but steady pace, with companies reluctant to hire new workers or lay off existing workforces in a period of unusual economic volatility. The report puts an end to a long period of absence of data, during the shutdown, and lights the way for the Federal Reserve, which will be able to decide the direction of monetary policy more serenely.
Another Department of Labor report on jobless claims showed an increase of 220,000 in the week ending Nov. 15, down 8,000 from the previous period and below consensus forecasts of 227,000.
The positive reaction of the markets
Wall Street opened higher on the data, while US Treasury yields remained mostly lower as traders continued to bet that the Federal Reserve will not lower rates at its December 9-10 meeting and may instead push back another intervention to 2026.
The Nasdaq index started trading up by 2.2%, while the S&P 50o index advanced by 1.8% and the Dow Jones by 1.3%. Ten-year Treasury yields fell 2.1 basis points to 4.112%, after moving between a low of 4.105% and a high of 4.168%.
The FOMC minutes
The minutes of the latest meeting of the FOMC, the Fed’s monetary policy committee, held on 28-29 October 2025, confirmed the uncertainty about the likelihood of a rate cut in December, given the persistent divisions within the committee on perceptions relating to inflation and unemployment.
Several Federal Reserve officials argued that it would be appropriate to keep interest rates unchanged for the remainder of 2025 and were opposed to reducing the Fed’s key rate at that meeting. However, other participants said another cut “may be appropriate” in December if the economy develops more or less as expected before the next meeting.
