U.S. employment growth unexpectedly slowed for the third straight month in September and the jobless rate rose, which could make the Federal Reserve more cautious about raising interest rates.
Nonfarm payrolls rose 156,000, down from a gain of 167,000 jobs in August, the Labor Department said on Friday, while the unemployment rate ticked up a tenth of a percentage point to 5.0 percent as more Americans rejoined the labor force.
The data suggested the economy was on firm ground, but not growing so swiftly as to knock the Fed off its game plan of raising borrowing costs only gradually.
"It's an economy that is doing OK. It's not necessarily accelerating, but it's certainly doing OK," said Jonathan Lewis, chief investment officer at Fiera Capital in New York.
On balance, the job market continues to improve, which could be an asset for Democratic presidential candidate Hillary Clinton in the Nov. 8 U.S. election. She has argued that the Obama administration's policies have helped the economy create millions of jobs.
U.S. stocks were slightly lower in early trading. The dollar slipped against a basket of currencies, suggesting traders were scaling back rate-hike bets. Rate futures, however, continued to point to an increase at the Fed's December policy meeting.
Fed Chair Janet Yellen has said the economy needs to create less than 100,000 jobs a month to keep up with population growth. Average monthly job gains have been about 180,000 this year, which Yellen has described as "unsustainable."
Economists polled by Reuters had expected employers to add 175,000 jobs last month, with the jobless rate holding steady. The government said 7,000 fewer jobs were created in August and July than had been previously reported.
Hourly wages for private sector workers rose 2.6 percent in September from the same month a year earlier, in line with expectations. Wage growth has shown signs of accelerating over the last year although it remains slower than before the 2007-2009 recession.
The employment report will be the last before the Fed's next policy meeting on Nov. 1-2. Investors see almost no chance of a rate increase at that meeting given how close it is to the election.
Yellen said last month that the Fed will likely raise rates once this year. It lifted its benchmark overnight rate at the end of last year for the first time in nearly a decade, but has held it steady this year amid concerns over persistently low inflation.
Three Fed policymakers voted for a hike last month when the central bank kept rates steady. However, Friday's data could boost the case of Fed officials who have vocally defended a go-slow approach to rate increases.
Republican presidential candidate Donald Trump has accused the central bank of playing politics by holding rates low, a charge Yellen and other Fed policymakers have denied.
Trump has made reversing job losses at U.S. factories a central campaign promise. Manufacturing employment fell by 13,000 jobs in September and the sector has shed jobs in three of the last five months.
In a statement, David Malpass, a senior economic adviser to Trump, said the economy continued to fall short in terms of "growth, income, trade and jobs."
"Americans desperately need more jobs and new economic policies, not the same-old, same-old offered by the Clinton campaign," Malpass said.
In an appearance on CNBC, top White House economic adviser Jason Furman said the data showed the economy on a good path.
"We're seeing exactly what we want to see in the economy, which is continued steady job growth, it brings people back (into the labor force), that's driving up wages, and that's a good thing," Furman said.
The slowdown in the labor market last month was spread widely, with transportation and warehousing shedding 9,000 jobs and the healthcare and social assistance sector adding only 21,800 jobs, down from 45,300 a month earlier.
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