By Gabriel T. Rubin

U.S. employers added 263,000 jobs in September, continuing a gradual cooling pattern in the labor market as high inflation weighed on the economy.

The unemployment rate fell to 3.5% from 3.7% in August, the Labor Department said Friday, matching a half century low that was last reached in July, a reflection of people leaving the job market. Wages rose 5.0% in September from the same month a year earlier, a slower pace than August's 5.2% annual rate.

"We are seeing labor demand cool," said Sarah House, senior economist at Wells Fargo. "But we have a long way to go towards restoring balance between supply and demand for labor."

Job gains were led by the leisure and hospitality industry, which added 83,000 jobs. Healthcare employment rose 60,000.

The number of job openings fell 10% in August to a seasonally adjusted 10.1 million from 11.2 million the month before, the Labor Department said Tuesday. The 1.1 million drop in openings is the largest decline since the early months of the Covid-19 pandemic in 2020. That left job openings at their lowest level in a year but still above their prepandemic level in 2019, when they averaged 7.2 million a month.

The payroll gain, while still robust, represents additional cooling of hiring from the monthly average of more than 440,000 during the first half of 2022.

The labor-force participation rate, which measures the percentage of working-age adults who are working or looking for work, dipped in September. That could complicate the Federal Reserve's inflation fight, since the labor market needs more workers competing for jobs to help cool wage growth and boost overall productivity. The participation rate fell to 62.3% in September from 62.4% in August.

Bryan Mena contributed to this article.

Write to Gabriel T. Rubin at gabriel.rubin@wsj.com

(END) Dow Jones Newswires

October 07, 2022 09:07 ET (13:07 GMT)