Disappointing 156,000 jobs added in September

Payroll growth was disappointing for a second straight month in September as employers added 156,000 jobs, which raised questions about the health of an economy that was expected to perk up from a prolonged slump in the second half of the year.

The unemployment rate rose to 5% from 4.9%, the Labor Department said Friday, as a rise in employment was more than offset by a sharp increase in the labor force, or the number of Americans working and looking for jobs.

Economists surveyed by Bloomberg had forecast 172,000 payroll gains.

Businesses added 167,000 jobs, led by professional and business services and health care. Federal, state and local governments cut 11,000.

Job gains for July and August were revised down by 7,000.

Average hourly wages rose 6 cents to $25.79 and are up 2.6% the past year, roughly in line with recent increases. Wage growth has picked up this year from the 2% pace that has marked much of the recovery but hasn't climbed as much as expected in light of the near-normal unemployment rate. The Fed seeks stronger earnings gains and inflation before raising interest rates again. The Fed has stood pat since lifting its key rate in December for the first time in nine years.

The tepid payroll increases "won’t stop the Fed from hiking interest rates at the December ... meeting, but it should quell any speculation of a move at the November meeting," economist Paul Ashworth of Capital Economics wrote in a note to clients.