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September jobs report: Unemployment falls to 3.5%, labor market remains tight

Yahoo Finance’s Jennifer Schonberger joins the Live show to discuss September jobs report data and where Fed Governor Christopher Waller stands on the economy.

Video transcript

[MUSIC PLAYING]

JULIE HYMAN: Welcome back. Here we are at 9:01 AM in New York City. We are seeing stocks tumble off the September unemployment data and jobs data. And we are seeing Treasury yields go higher. I'm Julie Hyman. That's Brad Smith. That is Brian Sozzi right over there. Sozz.

BRIAN SOZZI: All right, let's stay on all things jobs and this big jobs report. Non-farm payrolls rose by 263,000 in September. Now all eyes, of course, turn to the Federal Reserve and what it may or may not do. Yahoo Finance tech correspondent Jennifer Schonberger has more on this. Jen.

JENNIFER SCHONBERGER: Good morning, Brian. First, to take a look at those jobs numbers, a better than expected report, as you mentioned. The headline number coming in at 263,000. That's up from the 255,000 that was expected, though a bit cooler than 315,000 seen in August. The unemployment rate dropping to 3 and 1/2% from 3.7%. That puts it back at levels seen in July.

Now, average hourly earnings month over month rose 0.3%, 3/10 of a percent. Average hourly earnings up 5%. Those both right in line with expectations. The labor force participation rate holding steady at 62.3%. And I should note that that's a little bit more or less below than 1% where it was pre-pandemic. Now, the number of people employed part-time for economic reasons decreased by 306,000 to 3.8 million in September.

Diving into some of these sectors, there were notable job gains that occurred in leisure, hospitality, and healthcare. Want to flag that leisure and hospitality added 83,000 jobs in September. Also looking at employment in professional and business services, that continued its upward trend, rising 46,000 in the month. Construction up 19,000, manufacturing up 22,000-- in line with expected. Now, July was revised upwards by 11,000. That brought the number to 526,000 from 537, though August remained constant at 315.

Now, what this means for the Fed, this was clearly a strong jobs report. It points to a continued tight job market. And so with the job market holding strong as expected to keep the Fed on track for future rate hikes, this very much justifies the Fed's case to hold-- to hike rates and hold them higher for longer.

We'll hear from New York Fed President Williams later this morning, where he's likely to weigh in on the report. Thursday night, ahead of this report, we did hear from the Fed Governor Chris Waller, who said in his speech in Kentucky that expectations for job gains of 260,000-- remember, clocked in at 263,000-- would show that the job market is slowing a bit, but still quite tight. And as a result, he said he would not expect the jobs report to alter his view and that the Fed should be 100% focused on reducing inflation.

He says, quote, "We will get September payroll employment data tomorrow and CPI and PCE inflation reports later this month. I don't think that this extent of data is likely to be sufficient to significantly alter my view of the economy. And I expect most policymakers will feel the same way." So you have it right there. The Fed likely to stay on track. The next big report for them will be CPI out next Thursday. Guys.