WASHINGTON (Reuters) -U.S. job growth accelerated in September, but the unemployment rate rose to 4.4% and the economy shed jobs in the prior month, suggesting labor market conditions remained sluggish.

  Nonfarm payrolls increased by 119,000 jobs after a downwardly revised 4,000 drop in August, the Labor Department's Bureau of Labor Statistics said on Thursday. Economists polled by Reuters had forecast 50,000 jobs would be added after a previously reported 22,000 gain in August. 

The report was initially due on October 3, but was delayed by the 43-day shutdown of the government. The longest shutdown in history has forced the BLS to cancel the release of October's report as no data was collected for the household survey to calculate the unemployment rate for that month. 

October nonfarm payrolls will instead be combined with November's employment report now due on December 16, the BLS said. Though the September report is outdated, it suggested little change in the labor market, which has lost significant momentum this year as evidenced by sharp downward revisions to nonfarm payroll counts.

Heading into the economic data blackout, the BLS had estimated that about 911,000 fewer jobs were created in the 12 months through March than previously reported. A reduction in immigration that started during the final year of former President Joe Biden's term and accelerated under President Donald Trump's administration has depleted labor supply.

Economists estimate the economy now only needs to create between 30,000 and 50,000 jobs per month to keep up with growth in the working-age population, down from about 150,000 in 2024.

The unemployment rate increased from 4.3% in August. 

The rising popularity of artificial intelligence is also eroding demand for labor, with most of the hit landing on entry-level positions, and locking recent college graduates out of work. Economists said AI was fueling jobless economic growth.

Others blamed the Trump administration's trade policy for creating an uncertain economic environment that had hamstrung the ability of businesses, especially small enterprises, to hire. The U.S. Supreme Court early this month heard arguments on the legality of Trump's import duties, with justices raising doubts about his authority to impose tariffs under the 1977 International Emergency Economic Powers Act.

Despite payrolls remaining positive, some sectors and industries are shedding jobs. Some economists believed the September employment report could still influence the Federal Reserve's December 9-10 policy meeting.

U.S. central bank officials will not have November's report in hand at that meeting as the release date has been pushed to December 16 from December 5. Minutes of the Fed's October 28-29 meeting published on Wednesday showed many policymakers cautioned that lowering borrowing costs further could risk undermining the fight to quell inflation.