US Adds 263,000 Jobs In September As Labor Market Tightens: How Will The Fed Respond?

The SPDR S&P 500 ETF Trust SPY traded lower Friday morning after the Labor Department reported soft U.S. jobs market numbers from September.

What Happened: The U.S. added 263,000 jobs last month, outpacing average economist estimates of 250,000 jobs, according to Benzinga Pro. 

New data from the Bureau of Labor Statistics showed the U.S. unemployment rate at 3.5%, beating the 3.7% level economists had projected. The labor participation rate dropped 0.1% to 62.3%, compared to the 63.4% pre-pandemic rate in February 2020.

Wages were up 5% year-over-year and increased 0.3% from August. The leisure and hospitality industry led the job creation in September, adding 83,000 total positions.

The Labor Department also revised July's total job growth lower by 11,000 jobs to +537,000 and did not revise August's total of +315,000.

Why It Matters: The Federal Reserve is paying close attention to the jobs market as the central bank continues to work to cool the hottest inflation in more than 40 years.

The Fed issued its third consecutive 0.75% interest rate in September, bringing its target fed funds rate up to a range of 3% to 3.25%.

The new labor data comes after the Labor Department reported earlier this week that the total number of U.S. job openings dropped by 1.1 million jobs in August, a 10% monthly decline.

Following Friday's jobs report, the bond market is pricing in a 77.1% chance of another 0.75% rate hike in November.

Related Link: Are Declining American Job Openings A Good Sign? Why This Analyst Thinks So

SPY Price Action: The SPY fund was trading lower by less than 1% on Friday morning following the report.

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