Fears of Wall Street stagflation were raised by the September job loss and rise in wages.

According to Friday’s release of the U.S. Bureau of Labor Statistics nonfarm payroll data, only 194,000 U.S. jobs were created in September. That’s the lowest number of jobs created this year, and well below the 500,000 jobs markets expected.

Leisure and hospitality were the most popular areas of employment. This was partially due to declines in public schooling. (See Insiders’ Hot Stocks on TipRanks)

These findings are stark contrast to two other reports published this week that showed an improving labor market.

On Thursday, the U.S. Department of Labor Initial Claims Report showed that Initial Jobless Claims fell to 326,000 from 364,000 the week before. This means more people have jobs.

The September ADP Employment report published on Wednesday morning showed that America’s private businesses hired 568,000 workers in September of 2021, up from a revised 340,000 in August, and ahead of market expectations of 428,000 hires.

Analysts are Confused

Economic analysts are confused by the divergence in the reports for nonfarm payroll and initial claims.

To add confusion, the unemployment rate dropped from 5.2% in august to 4.8% September.

The private sector’s average hourly earnings grew at 0.6% per month in September. This is much higher than market expectations (which was 0.4%).

A combination of falling nonfarm payroll numbers and increasing wages has raised concerns that the U.S. is headed into stagflation. This refers to a condition in which sluggish growth and rising inflation co-exist.

Initial reactions of the financial markets to the report’s publication reflected the growing stagflation concerns. U.S. Treasury bond yields increased towards 1.6% as equity markets headed south. However, equities reversed their course just a few minutes later.

Evidently, the financial markets still have questions about the U.S. Labor Market, how it affects corporations and what the Federal Reserve’s policy will be. This is largely dependent upon the current state of America’s labor market.

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