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U.S. Adds Fewer-Than-Expected 661,000 Jobs in September as Non-Farm Payrolls Disappoint

U.S. employers added fewer new jobs than forecast last month as hiring slowed sharply in the wake of the expiration of CARES Act support for the coronavirus-hit economy.

U.S. employers added a much fewer-than-expected 661,000 new jobs last month, data from the Labor Department confirmed Friday, as hiring slowed sharply from August amid new layoffs and a broader economic slowdown linked to the coronavirus pandemic.

The 661,000 net new job total compares to an upwardly-revised August tally of 1.489 million but still takes the headline unemployment rate to 7.9%. Average hourly wages, the Bureau of Labor statistics said, rose 0.1% from August to $29.47, taking the year-on-year to to 4.7%. The labor force participation rate, a reading of long-term unemployment, fell to 61.4% from 61.7%, the BLS said, and the overall economy is down 10.7 million jobs from its February peak.

Market expectations were also boosted by a stronger-than-forecast reading of weekly jobs claims on Thursday, which showed that 837,000 Americans filed for unemployment benefits last week, down from 873,000 in the prior period and just shy of the Street's 850,000 forecast.

"For the most part, the economy has been continuing to heal and the employment numbers have been positive, but this month the large drop in the Labor Force Participation Rate is concerning," said Chris Zaccarelli, chief investment officer for the Independent Advisor Alliance.

"We have been stressing to clients that an additional round of stimulus will be necessary for the economy and markets to regain and maintain their footing as the damage done by the lockdowns was extensive and more fiscal assistance is necessary to bridge the gap from the strong economy of 2019 to a robust economy in 2021," he added.

Government workers were down 216,000 compared to August, the BLS said, and could partly explain the difference between this non-farm payroll report and ADP's private sector reading earlier this week, which showed new payroll additions rising by 749,000. The BLS report said private sector employment rose to 877,000.

U.S. equity futures weakened modestly on the news, but remain deeply in the red following news late last night that President Donald Trump and First Lady Melania have both tested positive for the coronavirus.

Futures contracts tied to the Dow Jones Industrial Average suggest a 490 point opening bell decline while those linked to the S&P 500 are pricing in a 64 point pullback for the broader benchmark. 

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was also unchanged at 93.739, while benchmark 10-year Treasury yields held at 0.644%.