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US. job growth slows, clouds case for Fed rate increase

US non-farm payrolls rose 156,000, down from a revised gain of 167,000 jobs in August, new figures show today
US non-farm payrolls rose 156,000, down from a revised gain of 167,000 jobs in August, new figures show today

US employment growth unexpectedly slowed for the third month in a row in September, which could make the Federal Reserve more cautious about raising interest rates. 

Non-farm payrolls rose 156,000, down from a revised gain of 167,000 jobs in August, the US Labor Department said. 

Economists polled by Reuters had expected employers to add 175,000 jobs last month. 

US 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." 

The unemployment rate ticked up a tenth of a percentage point to 5% last month, though the increase was driven by Americans rejoining the labour force. 

Today's employment report will be the last before the Fed's November 1-2 policy meeting.

 Investors see almost no chance of a rate increase at that meeting given how close it is to the November 8 presidential election. 

Yellen said last month that the Fed will likely raise rates once this year, but prices on fed funds futures suggest just above even odds the hike will come at the Fed's last policy meeting for the year in December. 

Today's figures showed that hourly wages for private sector workers rose 2.6% in September from the same month a year earlier, in line with economists' expectations. 

The annual growth rate has shown signs of accelerating over the last year although it remains slower than before the 2007-2009 recession. 

Three Fed policymakers voted for a hike last month when the Fed kept rates steady. 

However, today's data could boost the case of Fed policymakers who have vocally defended a go-slow approach to rate increases. 

The Fed lifted its benchmark overnight interest rate at the end of last year for the first time in nearly a decade, but has held it steady so far this year amid concerns over persistently low inflation.