US economy adds 156,000 jobs in September as payrolls rise

The US economy added a weaker-than-expected 156,000 jobs in September after strong job creation in the summer months, according to Labor Department data released Friday.

The unemployment rate, closely watched by US monetary policymakers, also nudged upward by a tenth of a point to 5.0 percent as an increasing number of Americans joined the job hunt, with 7.9 million people counted as unemployed.

The jobless rate could fuel disagreements among members of the US Federal Reserve who have publicly differed on whether the United States is at or nearing full employment and should raise interest rates sooner rather than later.

The job creation results, while still solid, were far lower than those recorded in June and July, when monthly totals surpassed more than a quarter million jobs. They were more in line with August's revised total of 167,000 new positions.

Forecasts had called for around 176,000 positions to be added for the month.

Among those out of work, the largest rise was among people who had been unemployed for fewer than five weeks; their ranks grew by 284,000, to 2.6 million. The number of long-term unemployed was essentially unchanged at 2 million.

- Looking to December -

The labor force participation rate rose 0.1 percentage point to 62.9 percent.

Hiring continued in the business and professional services sector, which added 67,000 jobs, up by 582,000 since the start of the year. Healthcare positions grew by 33,000, while restaurants, caterers and bars added 30,000 positions.

Over the month, the average workweek grew by 0.1 hours to 34.4 hours. A similar increase brought the manufacturing worker's average week to 40.7 hours. Average hourly earnings rose six cents to $25.79.

US interest rates have remained at historic lows, even after the Fed raised short-term rates in December for the first time in nearly a decade to their current target range of 0.25-0.5 percent.

After announcing a course of rate hikes for 2016, policymakers at the Fed have instead let them stand pat, citing uncertainty abroad and signs of weakness in the US.

In testimony last month, Fed chair Janet Yellen said the US was on course for a rate hike later this year if hiring continued to improve and no other major risks developed.

Fed members are next due to meet just days before the November 8 US elections, leaving observers to claim any 2016 rate increase can only come at the Fed's final meeting of the year in December.

?A disappointing employment report for September is a setback for those banking on a Fed rate rise later this year, but has by no means shut the door on a December hike," said Chris Williamson of IHS Markit.

However, Michael Gapen and Rob Martin of Barclays said the jobs results did not necessarily foreshadow an increase. "It is not clear to us that the labor market momentum evident in this report is fully consistent with a December rate hike," they wrote in a research note.

"Nonetheless, most members will likely take comfort from the underlying details of the report along with the relative strength in wage growth," they said.

There will be two additional jobs reports before the Federal Open Market Committee, which sets US interest rates, meets in December.

Tim Duy, senior director of the Oregon Economic Forum, said the so-called Fed "hawks," or those who favor more aggressive action to prevent inflation, had an increasingly difficult case to make.

"I would say one more report like this and the hawks will have another fight on their hands in December," he wrote on Twitter.

US equities markets opened lower on the news. Toward 1430 GMT, the Dow Jones Industrial Average and S&P 500 were down 0.2 percent while the Nasdaq had fallen 0.1 percent.