September added 29,000 jobs after the Federal Reserve raised rates on a summer now revised down

U.S. employers added 29,000 jobs in September, the Bureau of Labor Statistics said Friday, and revisions turned July's gain into a loss of 10,000.

On September 16 the Federal Reserve raised its target for the federal funds rate, the short-term rate it sets, by a quarter of a percentage point, to a range of 3.75% to 4%. July was then still a gain of 21,000, and August a gain of 162,000.

"Job gains have kept pace with the workforce, and the unemployment rate has changed little," Chairman Kevin Warsh said that day. "But inflation remains elevated."

August's gain is now 133,000. The bureau said employment in July and August combined is 60,000 lower than previously reported. Economists in a Reuters poll had expected 90,000 jobs in September, against that August figure of 162,000.

Private employers added 46,000 jobs in September. Government payrolls fell by 17,000. The bureau said employment changed little in government and in every other major industry.

The unemployment rate rose to 4.2%, from 4.1% in August, not the 4.1% in that poll. The bureau said both the job count and the rate changed little. The rate has stayed between 4.1% and 4.3% since March, and over the prior year payrolls had risen by an average of 45,000 a month.

Health care added 17,000 jobs, slower than its average gain of 33,000 a month over the prior year. Average hourly earnings rose 0.1% in September and were up 3.0% over the past year.

An October increase became less likely

CME FedWatch, drawn from futures tied to the Fed's policy rate, put the chance of an increase of a quarter of a percentage point at the October 27-28 meeting at 13% in the minutes after the 8:30 a.m. release, down from 23% before the report.

New York Fed President John Williams had spoken Tuesday in Buffalo, before Friday's report.

"With the policy action we took at our September meeting, there is no need for urgency, and we have time to gather more information," he said.

"If the economy evolves in a manner broadly consistent with my forecast, one further upward adjustment of the federal funds target range may be appropriate late this year," he said.

On Thursday, Adam Schickling, a senior economist at Vanguard, said this before the report.

"If we were to get a negative number, maybe downward revisions coupled with a higher unemployment rate, I think it's going to be hard for the market to maintain its level of confidence in an October rate hike," he said.

September payrolls were not negative. Revisions went down, and unemployment rose.

At 9:40 a.m. Eastern time, the 10-year Treasury yield was 5.20%, down 3.6 basis points on the day, after trading as low as 5.16%. BTLT, a fund that holds U.S. Treasury bonds maturing in more than 20 years, was up 0.4%.

ASPY, a fund that holds the S&P 500, was up 0.9% at 9:40 a.m. Eastern time.

Inflation is the question still open

Vice Chair Philip Jefferson spoke Thursday, before these job figures.

"In the labor market, a broad range of data indicates that conditions have stabilized," he said.

"I remain concerned about the risk of higher energy prices leading to a persistent rise in inflation more broadly," he said.

The price index for consumer spending was up 3.4% in August from a year earlier, the Bureau of Economic Analysis said on September 30. Leaving out food and energy, it was up 3.0%.

September consumer prices are due Wednesday, October 14, before the Fed meets on October 27 and 28. That report is the next one on the higher energy prices he said could lift inflation more broadly.