The pace of US jobs growth stalled for a second straight month, raising questions about whether the Federal Reserve can begin scaling back its enormous pandemic-era monetary stimulus as early as next month.

Employers in the world’s largest economy added just 194,000 jobs in September, falling short of the 366,000 gains posted in August and well below the monthly average of 561,000 since the start of the year. Economists had expected an increase of 500,000.

The unemployment rate declined for the third straight month, however, falling from 5.2 per cent to 4.8 per cent.

The unexpectedly weak report signals that many of the forces holding back employees from returning to the workforce persist, suggesting a rockier path forward for the US economy.

While schools reopened last month, helping to ease some of the childcare issues that have deterred workers, shortages still remain. That has raised concerns that the recovery of the world’s largest economy may be delayed for longer than initially expected.

“We are seeing supply issues remain more ingrained than any of us expected,” said Sarah House, senior economist at Wells Fargo, noting that disruptions related to the Delta variant of the coronavirus are wreaking havoc on the labour market recovery.

“It takes time for people to change their thinking about the risks of going back to work . . . [and] even though kids have started school, there are questions over how consistently they will be back,” she added.

The gains were driven by the leisure and hospitality sector, which added just 74,000 roles, in a sign that Americans likely cut back on travel and dining out amid the Delta surge. The industry is among the most sensitive to the pandemic.

Retail jobs and those for professional and business services also increased, as did transportation and warehousing posts. The number of public education jobs fell, with 161,000 fewer positions across local and government education.

The Bureau of Labor Statistics (BLS) noted seasonal factors were also an issue. “Recent employment changes are challenging to interpret, as pandemic-related staffing fluctuations in public and private education have distorted the normal seasonal hiring and lay-off patterns,” it said.

Employment in food services and other dining establishments was little changed for the second straight month. From January to July, that sector reported average monthly gains of 197,000.

Wage growth picked up, with average hourly earnings for all employees rising by 19 cents to $30.85, a 0.6 per cent month-over-month increase for an annual gain of 4.6 per cent. Recent data suggest “rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages,” BLS said.

Fed chair Jay Powell had said that a “decent” jobs report would mean the employment benchmark set forward by the central bank to begin winding down its $120bn asset purchase programme would be met. September’s data may add a wrinkle to that plan, creating what Afsaneh Beschloss, chief executive of investment firm RockCreek, said was a “conundrum” for the Fed.

There are still 5m more Americans out of work than at the start of the pandemic, and signs that the labour market recovery has lost momentum.

Powell had set the bar “quite low”, however, Thomas Simons, an economist at Jefferies said, and September’s data may not be weak enough to throw the central bank off course from a move to taper in November.

Andrew Hunter, senior US economist at Capital Economics, said that signs that activity growth is slowing while labour shortages pressure wages “looks set to leave Fed officials in an uncomfortable position over the coming months.”

The Fed has committed to buying Treasuries and agency mortgage-backed securities at that pace until it sees “substantial further progress” on dual goals of inflation that averages 2 per cent and maximum employment. The first goal has already been achieved, with consumer price growth hovering around a 13-year high.

Powell said last month, following the sharp slowdown in job creation, that the second goal was “all but met”.

The Fed chair said officials broadly support the stimulus programme ending in the second half of 2022, but said the timing and pace of the taper would not give a “direct signal” about the timing of future interest rate increases.

Senior officials have urged a patient approach to tightening policy, given marginal improvement in the labour force participation rate, which tracks the number of Americans employed or looking for a job.

In September, it was little changed at 61.6 per cent. The number of so-called prime-age workers aged 25 to 54 in the workforce dipped last month, casting doubt on a long-held prediction by economists that Americans would return to work en masse as schools reopened and federal unemployment benefits expired.

US Treasury yields initially fell following the employment report but were later higher across maturities. The biggest moves were in longer-dated Treasuries. Shorter-dated Treasuries, which move with interest-rate expectations, were ultimately little changed on the day, as were US stocks.

Additional reporting by Kate Duguid and Taylor Nicole Rogers in New York