The U.S. economy added 29,000 nonfarm payroll jobs in September, while unemployment rose to 4.2%, the Bureau of Labor Statistics reported Friday. Economists surveyed by Dow Jones had expected 84,000 new jobs and an unemployment rate of 4.1%. For workers, the gap between those expectations and the reported numbers isn’t abstract: the figures describe a labor market offering fewer openings than forecasters anticipated.
“Americans are frustrated by the lack of opportunities right now,” said Heather Long, chief economist at Navy Federal Credit Union. She said wage growth fell to a new five-year low and was “being wiped out entirely by inflation.” That stings heading into the holidays, she said.
The numbers workers are handed
The August jobs count was revised down to a gain of 133,000. July payrolls, previously reported as a gain, were revised to a loss of 10,000. Together, those revisions showed 60,000 fewer jobs than previously reported. Officials changed the picture after the fact, while people looking for work still face the conditions those figures describe.
Healthcare supplied most of September’s job gains, adding 17,000 workers. Construction added 11,000 jobs, and manufacturing added 9,000. Government employment fell by 17,000, temporary help services declined by 11,000, and information services lost 10,000 amid concerns about artificial intelligence’s effect on jobs. Financial activities shed 7,000 jobs.
Average hourly earnings rose 0.1% in September, bringing the 12-month increase to 3%, the lowest since May 2021. Wall Street had expected monthly and annual increases of 0.3% and 3.1%. The average workweek stayed at 34.6 hours. Long described the labor market as “stable,” but said she didn’t think the Federal Reserve would be dissuaded from hiking in December.
Rate decisions belong to the central bank
Federal Reserve officials assessed the economy ahead of their next interest-rate decision. The FOMC raised benchmark rates by a quarter percentage point in September. After central bank policymakers made statements in recent days, markets had expected the rate-setting Federal Open Market Committee to hold off until December for its next hike.
Traders read the weak report as support for the Federal Reserve holding rates at its October meeting. Stock futures rose sharply after the release, while Treasury yields fell after recently reaching levels not seen since the early part of the century. Market-implied odds of a hold at the Oct. 27-28 meeting rose to 82.8%, according to CME Group’s FedWatch tool. The figures don’t decide policy; central bank officials do.
“For the Fed, this number should be the nail in the coffin for an October hike,” Thomas Simons, chief U.S. economist at Jefferies, said in a note. He said August’s payroll data had surged and economists expected momentum to continue, given historically low jobless claims in recent weeks. “However, it now appears that the August number was nothing more than a rebound from very weak hiring in June and July,” he added.
A stronger survey, and inflation above target
Fed officials watch the unemployment rate more closely than the headline payroll figure. The household survey, which officials use to calculate unemployment, was considerably stronger than the establishment survey, which they use to calculate payrolls. Household employment rose by 406,000, the labor force grew by 485,000, and the labor-force participation rate increased 0.2 percentage point to 61.8%, its highest since May.
An alternative unemployment measure, which includes discouraged workers and people working part time for economic reasons, edged down to 7.6%, its lowest since January 2025. Weekly jobless claims remained low, and one indicator showed layoffs at their lowest rate in four years. Yet policymakers largely viewed inflation as a greater threat to the economy than the labor market. Inflation remained well above the Fed’s 2% target, and the latest reading of its preferred gauge showed core inflation at a 3% annual rate.
The Commerce Department revised its estimates of gross domestic product growth for the first and second quarters to 2.5% and 2.2%, respectively. The Atlanta Fed was tracking third-quarter GDP growth at 3.7%. Growth forecasts, rate bets and central-bank decisions fill the report. So do 29,000 jobs, falling wage growth and workers’ frustration over opportunities.