US adds just 29,000 jobs in September, missing forecasts by a wide margin

The US economy added just 29,000 jobs in September — less than a third of what economists expected and below every single estimate in a Bloomberg survey — as the labor market extended a slow-motion deceleration that has now lasted most of the year. The Bureau of Labor Statistics released the figures Friday morning, and they landed with a thud: the headline number missed the consensus forecast of roughly 90,000, prior months were revised lower by a combined 60,000 jobs, and annual wage growth fell to its weakest level since May 2021.

The report is also the final official employment snapshot before the midterm elections, giving it unusual political weight. Yet the underlying picture, while soft, stopped well short of alarming. The unemployment rate ticked up one-tenth of a percentage point to 4.2% — where it has now traded in a narrow band between 4.1% and 4.3% since March — and the rise was driven in part by more people entering or re-entering the labor force, not by mass layoffs.

We are just seeing the labor market holding up. It's a slow labor market, hiring's still slow, we still see elevated competitiveness, job seekers still have low confidence; but we don't see any red flags that the labor market is getting worse.— Kory Kantenga, Chief Economist, LinkedIn

The revisions to prior months sharpened the picture of a summer that was weaker than it first appeared. July, initially reported as a gain of 21,000 jobs, was revised to a loss of 10,000 — putting it back in negative territory. August was trimmed from 162,000 to 133,000. Together those changes erased 60,000 jobs from the record. The three-month average for total nonfarm payroll growth now stands at 51,000, and Goldman Sachs noted that figure roughly matches its estimate of the 'breakeven pace' — the level at which job creation is just keeping up with labor force growth rather than getting ahead of it, according to The Street.

For the year as a whole, payrolls have averaged 68,000 jobs per month, according to BLS data — stronger than 2025's pace but well below the 85,000-per-month average of 2024 and below pre-pandemic norms. CNN described the current environment as a 'low-hire, low-fire' labor market undergoing a structural shift driven by an aging population, increased Baby Boomer retirements, a decline in immigration, and the advancement of artificial intelligence.

The September report draws on two separate BLS surveys that can diverge sharply. The establishment (payroll) survey — which produced the headline 29,000 figure — asks employers how many people they paid during the survey week. The household survey asks individuals directly whether they had a job. In September the two told different stories: the household survey showed employment rising by 406,000, but the labor force grew even faster, by 485,000, which is why the unemployment rate still edged higher. The household survey is considered more volatile and less reliable by many analysts, according to The Street.

Sector by sector, the gains were narrow. Healthcare and social assistance added 23,000 jobs according to CNN — though BLS put the healthcare-only figure at 17,000 — continuing a multi-year trend driven by an aging population, but at a pace roughly half the sector's 12-month average. Construction added 11,000 jobs, its seventh consecutive month of gains, with much of the activity on the non-residential side, likely reflecting investment in AI-related infrastructure such as data centers, according to CNN. Manufacturing extended its own winning streak to four months, adding 9,000 jobs and lifting the sector 72,000 above its recent low in December 2025.

The losses were spread more broadly. Government payrolls fell 17,000, led by local government. Federal employment slipped another 1,000 to 2.682 million — just above April's level, which according to The Street is the lowest since May 1966, and now down 331,000 or 11% from its October 2024 peak. Information (tech), professional and business services, and financial activities all shed jobs. Financial activities employment is now down 129,000 since a peak in May 2025, with most of the loss concentrated in insurance carriers, according to BLS.

One detail that caught analysts' attention: temporary help services lost 10,900 jobs, dragging down the professional services sector. Temp employment is often treated as a leading indicator because companies use it to flex headcount before committing to permanent hires.

This may signal weakening demand for hiring in the coming months. Instead of changing headcount for their permanent workforce, employers often turn to temp services to scale up and down more quickly, to be able to respond to changing economic conditions.— Nicole Bachaud, Economist, ZipRecruiter

Wage growth, meanwhile, continued to fade. Average hourly earnings for private-sector workers rose just 5 cents, or 0.1%, to $37.81 in September. Year-over-year, earnings are up 3.0% — the fourth consecutive month of slowing annual growth and the weakest reading since May 2021, according to BLS. With inflation running above that level, real purchasing power is being eroded.

Americans are frustrated by the lack of opportunities right now. Wage growth fell to a new 5-year low and is being wiped out entirely by inflation. That stings heading into the holidays.— Heather Long, Chief Economist, Navy Federal Credit Union

Markets responded quickly. Stocks rose and bond yields fell as traders pared back expectations for a Federal Reserve rate hike at its meeting later this month. The 10-year Treasury yield dropped to 5.21%, though it remains at multi-year highs. The Fed's dual mandate — maximum employment and stable prices — means a cooling labor market gives central bankers more room to hold rates steady rather than raise them further, but analysts cautioned against reading the report as unambiguously good news.

Today's report may revive the 'bad news is good news' narrative, but hoping for a weaker labor market just to secure easier financial conditions is a poor tradeoff. Lower rates may support markets in the near term, but a meaningful deterioration in hiring and income would eventually weigh on consumer spending and economic growth.— Bret Kenwell, US Investment Analyst, eToro

The inflation backdrop adds another layer of complexity. Mike Reid, head of US economics at RBC Capital Markets, pointed to tariffs still in play and energy costs beginning to spill over, with elevated freight costs adding to price pressures. 'The real challenge for the US economy is the inflation pipeline is heating up,' he told CNN. That means the Fed faces a labor market that is softening at the same time that price pressures are building — a difficult combination to navigate with a single interest-rate tool.

The next reading will come on November 6, 2026, when BLS releases the October Employment Situation report. That report will also carry the next round of revisions to September's figures — revisions that, given the pattern of recent months, could move the number in either direction.

Why it matters — With wage growth being erased by inflation, hiring at its slowest sustained pace in years, and the Fed weighing whether to raise rates further, the September jobs report shapes both household finances and the cost of borrowing for millions of Americans heading into the holiday season.

Sources differ on Healthcare and social assistance job gains in September: +23,000 (healthcare and social assistance combined) (cnn.com) vs +17,000 (healthcare only, per BLS establishment survey) (bls.gov) vs +17,000 (healthcare only) (marketreview.com)

Reported by bls.gov, cnn.com, marketreview.com, pro.thestreet.com, jec.senate.gov