A slowdown in the US jobs market drove stocks higher on speculation the Federal Reserve won’t be forced to lift rates any time soon.
The U.S. added just 29,000 jobs in September, a sign that the labor market may not be able to deliver the sizable gains that it did in the past—but doesn’t need to in order to keep the unemployment rate low.
The unemployment rate rose to 4.2%, partly reflecting a growing workforce.
While bonds were little changed after a brief rally, money markets now see an only 20% chance of a Fed hike in October. A drop in oil prices also helped sentiment. The Group of Seven nations and its partners are set to release as many as 100 million barrels of diesel and crude.
The US added fewer jobs than expected in September and wage growth slowed, signaling some caution among employers amid rising costs.
The September jobs report provides additional weight to the case for a patient Fed rather than one that needs to move forward more aggressively with a series of hikes to achieve its dual mandate.
Friday’s data may revive the “bad news is good news” narrative, but hoping for a weaker labor market just to secure easier financial conditions is a poor tradeoff, according to Bret Kenwell at eToro.
Inflation remains a problem, but a breakdown in the labor market would create an entirely different one, he noted.
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