The US economy added more jobs than expected in the first batch of economic data since the government shutdown, but the unemployment rate ticked up – boosting the odds of an interest-rate cut next month.

Employers added 119,000 jobs in September, up from the 4,000 jobs lost in August following a revision and far above expectations of 50,000 added jobs, the Bureau of Labor Statistics said Thursday.

The unemployment rate, however, ticked up to 4.4% – from 4.3% the previous month and the highest level since October 2021. 

Traders clung onto that sign of weakness as they pushed odds of an interest-rate cut at the Fed’s December meeting up nearly 10%, to 39.6%, according to CME FedWatch.

“The September jobs report had a decent payrolls headline, but most other details were weak, effectively cancelling out that good news,” Bill Adams, chief economist for Comerica Bank, said in a note Thursday. 

But the employment update was a mixed bag of data, and largely backward-looking – which some analysts claimed made it unlikely to sway Fed officials one way or another on interest rates. 

“The overall picture is a labor market that is showing cracks but still holding up under pressure,” Ryan Young, senior economist with the Competitive Enterprise Institute, a libertarian think tank, said in a note Thursday.

“The just-released September jobs data won’t be very useful for the Federal Reserve’s next interest rate decision.”

Hourly earnings increased 0.2% for the month and 3.8% from the previous year, according to the jobs report.

Analysts had expected increases of 0.3% and 3.7%, respectively.

Investors have been eager to get their first glimpse of the state of the labor market as Fed officials have increasingly advocated for a more cautious rate-cutting path.

“Thursday’s jobs report was much stronger than expected and it’s possible that the Federal Reserve may take more of a wait-and-see approach to rates in December,” Alexander Guiliano, chief investment officer at Resonate Wealth Partners, said in a note Thursday.

After stocks rallied Thursday morning in the wake of upbeat Nvidia earnings, they were down across the board as of about 12:15 p.m. ET. The Dow Jones Industrial Average dropped 160 points, or 0.3%, while the S&P 500 and Nasdaq dropped 0.6% and 0.9%, respectively.

September’s better-than-expected jobs data doesn’t paint a picture of the current labor market, though, as there have already been several likely shocks.

About 100,000 federal workers went off payrolls in October after accepting delayed resignations.

The October jobs report is expected to be released in December, though the White House has warned that only half of the data will be published due to the shutdown.

Numbers for July and August job gains were revised down slightly on Wednesday, erasing 33,000 jobs from the two months together – helping September look like slightly more of an acceleration, though that could also change after revisions.

And the Department of Homeland Security said at the end of October it has deported 527,000 illegal immigrants, and another 1.6 million have left voluntarily – possibly keeping the unemployment rate lower than it might have been.

September’s nonfarm payrolls data showed gains in the usual sectors. 

Healthcare added 43,000 jobs, while restaurants and bars gained 37,000.

Social assistance employment added 14,000 roles.

Transportation and warehousing, meanwhile, suffered a loss of 25,000.

Federal government employment shed 3,000 jobs – down by 97,000 since its peak in January as the White House has continued on its cost-cutting agenda.