US Added Just 29,000 Jobs in September, Far Below Forecasts, as Unemployment Ticks Up

The US economy added just 29,000 jobs in September, the Labor Department reported Friday morning — a fraction of the roughly 90,000 economists had forecast and a sharp comedown from August's already-revised headline. The unemployment rate edged up to 4.2%, and wage growth slowed to its softest monthly pace in recent memory, delivering what one economist called a report that was 'all around weak — but not tragic.'

All around weak — but not tragic.— Justin Wolfers, economist

The miss was compounded by revisions that erased 60,000 jobs from the two preceding months. August's gain was cut from 162,000 to 133,000, and July's initially reported increase of 21,000 was revised to a loss of 10,000, according to the Bureau of Labor Statistics. Together, the revisions suggest demand for workers has been more subdued throughout the summer than the data had indicated at the time.

Economists surveyed by Bloomberg had expected a gain of 90,000 jobs in September and had forecast the unemployment rate to hold at 4.1% for a third consecutive month, according to Yahoo Finance. Instead, the unemployment rate ticked up to 4.2% — still within the narrow 4.1%-to-4.3% range it has occupied since March, the BLS noted, but moving in the wrong direction. The number of unemployed people stood at 7.1 million.

Wage growth offered little counterargument. Average hourly earnings for private-sector workers rose just 5 cents, or 0.1%, to $37.81 in September. Over the past 12 months, earnings are up 3.0% — down from 3.1% in August and well below the 3.8% pace recorded a year earlier, according to the BLS. Yahoo Finance noted that a 3% annual gain is likely below the current rate of inflation, meaning workers' purchasing power is effectively shrinking.

The sector breakdown was narrow. Healthcare led all industries with 17,000 new jobs, though that was below the sector's own 12-month average of 33,000 per month. Construction added 11,000. Manufacturing gained 9,000. Government employment changed little, and financial activities shed 7,000 jobs — bringing that sector down 129,000 positions since its recent peak in May 2025, with losses concentrated among insurance carriers, according to the BLS.

2026 is better than 2025 for hiring. But there still isn't much hiring outside of healthcare and jobs to build/supply data centers.— Heather Long, chief economist at Navy Federal Credit Union

The report lands at a sensitive moment for the Federal Reserve. Fed Chair Kevin Warsh had cited a labor market 'in good shape' when explaining the central bank's decision to raise rates for the first time since 2023, according to Morningstar. But market-implied odds of another hike at the October meeting had already fallen sharply — from 71% on Monday to about 34% on Thursday, after dovish remarks from New York Fed President John Williams and a cooler-than-expected inflation reading, Morningstar reported. Friday's miss is likely to push those odds lower still.

The underlying story is still a low-hire, low-fire labor market. This report strengthens the case for the Federal Reserve to remain patient.— Adam Schickling, senior economist at Vanguard

MarketPulse analyst Łukasz Zembik wrote that weak job creation, downward revisions, and slower wage growth 'reinforce the case for an October pause,' adding that he expects the next rate increase to come in December rather than this month — though he cautioned that will depend on upcoming inflation data, particularly whether higher energy costs feed into broader price pressures.

In the immediate market reaction, the dollar strengthened, gold gained, and US Treasury yields fell, according to MarketPulse. The S&P 500 and Nasdaq 100 both moved higher — a pattern consistent with investors pricing out near-term rate hikes. Analysts noted, however, that the longer-term picture for equities is less clear: lower rate expectations support valuations, but a sustained hiring slowdown could eventually weigh on household spending and corporate earnings.

Over the past six months, employment has grown by an average of 66,000 jobs per month, according to MarketPulse. The BLS reported that over the prior 12 months, the average monthly gain was 45,000. The labor force participation rate held at 61.8% in September, and 5.8 million people not in the labor force said they currently want a job but were not counted as unemployed because they were not actively searching.

The next Employment Situation report, covering October data, is scheduled for release next month.

Why it matters — A labor market adding fewer than 30,000 jobs — well below what's needed to absorb new workers — shifts the calculus for the Federal Reserve's next rate decision and signals that the post-pandemic hiring boom has definitively faded.

Reported by bls.gov, reuters.com, morningstar.com, marketpulse.com, finance.yahoo.com, nytimes.com