Nick Timiraos | for the Fed, a Middling Jobs Report Will Keep Focus on Inflation Data

Dow Jones
1 hour ago

The September employment report will give Federal Reserve officials little reason to change their underlying view of the economy, and it removes one potential obstacle to holding interest rates steady this month.

The most important development was that the report provided few signs that the labor market is tightening in ways that would add to price pressures. Top Fed officials signaled this week they want more time to assess how inflation trends are unfolding after they raised rates last month, and Friday's report gives them room to wait.

Hiring slowed in September and revisions showed job growth over the summer was slightly cooler than previously reported. The unemployment rate rose to 4.2% from 4.1%, but the increase was smaller than it appears: unrounded, the rate edged up to 4.18% from 4.14%.

A meaningful drop in the unemployment rate, which Fed officials watch more closely than monthly payroll gains, could have complicated the decision by Chairman Kevin Warsh and his colleagues regarding whether to raise interest rates again this month by showing pressures that would push up the cost of labor. Friday's report gave them no such signal.

A reading on consumer prices for September, due Oct. 14, is likely to weigh more heavily on the timing of further rate increases and how far the current tightening runs.

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