US hiring slowed in September as global economy weakened

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U.S. Adds 142,000 Jobs in Sept., Jobless Rate 5.1%

WASHINGTON (AP) — U.S. hiring slowed sharply in September, and job gains for July and August were lower than previously thought, a sour note for a labor market that had been steadily improving.

The Labor Department said Friday that employers added just 142,000 jobs in September, depressed by job cuts by manufacturers and oil drillers. The unemployment rate remained 5.1 percent, but only because more Americans stopped looking for work and were no longer counted as unemployed.

SEE ALSO: The top ten jobs for salary and growth in 2015

All told, the proportion of Americans who either have a job or are looking for one fell to a 38-year low.

Some of that decline likely reflects baby boomer retirements, but it also indicates that many Americans remain discouraged about their job prospects. Modest growth and steady, if unspectacular, hiring hasn't encouraged more people to look for work.

Average hourly wages also slipped by a penny and have now risen by only 2.2 percent in the past year.

U.S. consumers are spending at a healthy pace, boosting job gains in sectors like retail and hotels and restaurants. But lackluster growth overseas has sharply reduced exports of factory goods.

SEE ALSO: Average American wages are on the decline

China, the world's second-largest economy, is slowing. Europe is still weak. Emerging economies such as Brazil and Turkey are struggling to grow at all. Sharply lower oil prices have also prompted drilling firms to lay off workers and slash spending on steel pipe and other equipment.

The tepid pace of hiring complicates the picture for the Federal Reserve, which is deciding whether to raise short-term interest rates later this year for the first time in nine years.

Fed Chair Janet Yellen has said that the job market is nearly healed. But she has added that she wants to see further hiring and wage gains to increase her confidence that inflation will move closer to the Fed's target of 2 percent.

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US hiring slowed in September as global economy weakened
Unemployed and homeless people line up for a free meal and new shoes during a Good Friday event in Los Angeles, California on April 3, 2015. After a year of pumping up their payrolls, US employers sharply cut back hiring in March, in a fresh sign of a slowdown in the world's leading economy. AFP PHOTO/ MARK RALSTON (Photo credit should read MARK RALSTON/AFP/Getty Images)
UNITED STATES - JUNE 18: Rep. Donna Edwards, D-Md., speaks during a news conference outside of the Capitol on how women and families are impacted without unemployment insurance on Wednesday, June 18, 2014. (Photo By Bill Clark/CQ Roll Call)
MIAMI, FL - SEPTEMBER 04: A help wanted sign is seen in the window of the Unika store on September 4, 2015 in Miami, Florida. The U.S. Bureau of Labor Statistics released the August jobs report that shows that the economy created just 173,000 new jobs last month. But the unemployment rate dipped to 5.1%, the lowest since April 2008, (Photo by Joe Raedle/Getty Images)
An 'Uplift Your Career' sign is displayed as a job seeker speaks with potential employers during a HireLive job fair in St. Louis, Missouri, U.S., on Thursday, Aug. 20, 2015. The number of Americans filing for unemployment benefits last week remained historically low. The subdued level of firings has been accompanied by falling unemployment and steady job gains, signs the labor market continues to heal in its seventh year of recovery. Photographer: Luke Sharrett/Bloomberg via Getty Images
SAN FRANCISCO, CA - JULY 02: Pedestrians walk by a 'now hiring' sign at a KFC restaurant on July 2, 2015 in San Francisco, California. According to a report by the U.S. Labor Department, employers added 223,000 jobs in June dropping the national unemployment rate to 5.3 percent, the lowest level since April 2008. (Photo by Justin Sullivan/Getty Images)
SAN FRANCISCO, CA - JUNE 04: A job seeker fills out registration forms before entering a HireLive career fair on June 4, 2015 in San Francisco, California. According to a report by payroll processor ADP, 201,000 jobs were added by businesses in May. (Photo by Justin Sullivan/Getty Images)
SAN FRANCISCO, CA - JUNE 04: A job seeker shakes hands with a recruiter during a HireLive career fair on June 4, 2015 in San Francisco, California. According to a report by payroll processor ADP, 201,000 jobs were added by businesses in May. (Photo by Justin Sullivan/Getty Images)
A man walks with a load of plastic bottle and soda cans he collected from subway stations in New York on May 19, 2015. AFP PHOTO/JEWEL SAMAD (Photo credit should read JEWEL SAMAD/AFP/Getty Images)
Job seekers sit in a waiting area at the Choice Career Fair in San Antonio, Texas, U.S., on Thursday, April 16, 2015. Fewer than 300,000 American workers filed applications for unemployment benefits for the sixth consecutive week, pointing to labor-market strength even as hiring cooled last month. Photographer: Matthew Busch/Bloomberg via Getty Images
Job seekers speak with recruiters during a career fair at San Francisco State University in San Francisco, California, U.S., on Friday, April 3, 2015. Employers in March added the fewest workers since December 2013 and the jobless rate held at 5.5 percent as companies sought to bring U.S. headcounts in line with an economy that throttled back at the start of the year. Photographer: David Paul Morris/Bloomberg via Getty Images
Unemployed and homeless people line up for a free meal and new shoes during a Good Friday event in Los Angeles, California on April 3, 2015. After a year of pumping up their payrolls, US employers sharply cut back hiring in March, in a fresh sign of a slowdown in the world's leading economy. AFP PHOTO/ MARK RALSTON (Photo credit should read MARK RALSTON/AFP/Getty Images)
PORTLAND, TX - MARCH 27: Misty Archibeque takes care of her quintuplets as her husband Adam, who was let go from a downsizing oil field operator, concentrates on searcing for work on March 27, 2015 in Portland, Texas. Archibeque and his wife Misty recently had quintuplets, making his current unemployment even more costly.Texas, which in just the last five years has tripled its oil production and delivered hundreds of billions of dollars into the economy, is looking at what could be a sustained downturn in prices. Crude oil prices today are almost 60 percent lower than they were six months ago.While the Texan economy has become more diversified over the years, oil is still the states largest monetary generator and any sustained downturn would be devastating for employment and the economy. Outplacement firm Challenger, Gray & Christmas this month said a drop in oil prices have been responsible for 39,621 job cuts in the first two months of the year. (Photo by Spencer Platt/Getty Images)
Homeless men and women wait to get food and shelter at the Reno-Sparks Gospel Mission in Reno, Nevada, U.S., on Friday, March 20, 2015. Reno, a town that built an economy on quickie divorces, is mapping out the second act of its American life. As unemployment dropped by 1.5 percentage points the city has attracted tech companies such as Bay Area-based Apple Inc. and Tesla Motors Inc. Photographer: David Paul Morris/Bloomberg via Getty Images
NEW YORK, NY - MARCH 06: A New York Labor Department office is viewed in Manhattan on March 6, 2015 in New York City. Beating expectations, the Labor Department reported on Friday that employers added 295,000 workers in February. The robust numbers brought the unemployment rate down to 5.5 percent, its lowest since mid-2008. (Photo by Spencer Platt/Getty Images)
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"Every aspect of the September jobs report was disappointing," said Michelle Girard, an economist at RBS Securities. It "strengthens the case that the Fed will be forced to stay on hold over the remainder of the year."

Stock index futures and bond yields fell after the payroll figures came in far weaker than economists were expecting.

Index futures were down 1 percent for the Dow Jones industrial average and the Standard & Poor's 500 index. The yield on the 10-year Treasury note fell to 1.96 percent from 2.04 percent shortly before the job survey was released. Investors tend to buy bonds, pushing yields lower, when they expect sluggish economic growth and low inflation.

U.S. unemployment rate and newly employed:

Job gains have averaged 198,000 a month this year, a solid total, but below last year's average of 260,000.

Construction firms added 8,000 jobs and professional services, which includes accounting and architects, gained 31,000. Government added 24,000 jobs. But financial services reported no gain, and hiring in education and health fell to the lowest level in nearly a year.

Some recent data has pointed to a healthy economy: Sales of new U.S. homes have jumped to a seven-year high, and auto sales soared nearly 16 percent in September to the highest level in a decade.

At the same time, the dollar has risen about 15 percent against overseas currencies in the past year, making U.S. goods more expensive overseas and imports less expensive. A sharp fall in exports has likely slowed growth in the July-September quarter to an annual rate of just 1.5 percent, according to economists from JPMorgan Chase. That's down from a 3.9 percent pace in the April-June quarter.

U.S. unemployment in the last 10 years:

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