US labour market cools sharply in September

The US labour market slowed down markedly in September and gains for the prior month were revised lower.

Non-farm payrolls grew at a 142,000 pace last month, comfortably below the trend seen over the previous 18 months, according to the Bureau of Labour Statistics.

Economists had anticipated an increase 201,000.

Furthermore, revisions to the prior month´s data revealed 136,000 jobs were added, down from a preliminary estimate of 173,000.

Participation rate keeps retreating

The unemployment rate was unchanged at 5.1%, as expected.

Nonetheless, that was only because the labour force contracted by 350,000, more than off-setting a 236,000 fall in employment. As a result, the participation rate fell to a near 40-year low of 62.4% last month, down from 62.6%.

Note, however, "that the wider U6 unemployment rate actually fell sharply to only 10.0%, from 10.3%," Capital Economics said.

The U6 rate of unemployment is defined by the Bureau of Labour Statistics as total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

The chances of a rate hike by the Fed this year just went way down

Average weekly earnings were flat in comparison with August, coming in below the 0.2% rise which analysts had anticipated.

The increase for August was revised higher to show a gain of 0.4% month-on-month, up from a preliminary estimate of 0.3%.

Hiring in the private sector picked up to a 118,000 person pace following a reading of 100,000 for the month before.

Jobs growth in the goods-producing sector decreased by -13,000 after a drop of -22,000 in the month before.

The public sector generated 24,000 jobs, down slightly from the prior month´s gain of 36,000.

The index of aggregate weekly hours decreased by 0.2% month-on-month to hit 124.3.

Odds of 2015 rate hike go out the window

"While it’s always important not to over-react to one single data release, we’ll make an exception in this case. The chances of a rate hike by the Fed this year just went way down," wrote Paul Ashworth, chief US economist at Capital Economics.

"We wouldn’t be surprised if the economy had a stronger fourth quarter. But that isn’t going to show up in the published data for another few months, which means the Fed won’t be raising rates until early 2016."