Interest hike likely to hold off after hiring pace fell

September hiring fell well short of consensus expectations and previous gains were less robust than thought, new Labor Department statistics show a dismal monthly report that painted a picture of an economy in downshift mode.

Employers added a disappointing 142,000 jobs in September, the Labor Department said Friday, and added just 136,000 jobs in August, a revision of an earlier estimate of 173,000. The unemployment rate held steady at 5.1 percent.

“The job report was unambiguously soft,” said Mark Zandi, chief economist for forecaster Moody’s Analytics. “Not only was the monthly job gain light, but there were surprising downward revisions to gains in previous months.”

Here are three important takeaways from the dismal jobs report:

Global spillover: Several important sectors fell back sharply in September, suggesting that the global economic slowdown is spilling over into the U.S. economy. At minimum, the global turmoil is “causing businesses to turn more cautious in their hiring,” said Zandi.

The financial sector, which holds an important place in the economy, was flat. The construction sector, in the final months before the winter slowdown, added a lackluster 8,000 jobs. And the labor-intensive manufacturing sector, socked on the chin by the strong U.S. dollar, shed 9,000 posts in September. A stronger dollar makes U.S. goods more expensive abroad.

Services, health care still bright: The professional and business services sector, often better-paying white-collar jobs, added 31,000 posts last month. The health care sector, continuing a strong win streak, added almost 35,000 jobs.

The weak hiring stands in contrast to the solid readings of consumer sentiment and recent sales of automobiles. When sentiment is strong, it’s reflected at the mall and in stores. The retail sector added almost 24,000 jobs last month, while companies engaged in leisure and hospitality led all sectors with 35,000 new posts.

Fed likely to hold off: September’s phlegmatic hiring makes almost nil the chance that the Federal Reserve will raise, later this month, its key benchmark interest rate. That fed funds rate influences the cost of borrowing for consumers and businesses across the economy, and the Fed hasn’t raised it in almost a decade.

“Financial markets are now pricing in the first increase in the funds rate in March ,” said Gus Faucher, senior economist at PNC Financial Services in Pittsburgh.