U.S. employers added just 29,000 jobs in September, while wages rose 3% from a year earlier. The stock market moved back toward record levels, and wealthy investors benefited from the gains. The unemployment rate climbed to 4.2% from 4.1% in August. Economists had expected about 90,000 new payroll jobs.
The Labor Department also cut the combined July and August payroll totals by 60,000 jobs. September’s wage increase marked the smallest year-over-year gain since May 2021. Consumer prices remained elevated, and workers’ pay again failed to keep pace.
Workers Face a Slow Hiring Market
Employers posted 7.08 million job openings in August, down from a revised 7.34 million in July and below forecasts of 7.2 million. The Labor Department’s Job Openings and Labor Turnover Survey showed layoffs fell, quits changed little and gross hiring ticked up modestly. Hiring remained below the monthly average of 166,000 jobs in 2023 and 2024, and far below the 491,000 monthly average during the 2021-2022 hiring boom after COVID-19 lockdowns.
Ken Mahoney, chief executive at Mahoney Asset Management, called the situation “‘low hire, low fire.’” “Companies are not adding many people, and they are not laying many off either,” he said. Mahoney said some firms had already “right-sized,” and that AI “may be taking a little of the edge off new hiring.” He described September as part of a slow trend, not a break in the economy.
The Conference Board’s consumer confidence index dropped 6.7 points, to 81.9 in September from 88.6 in August. It was the survey’s lowest reading since April 2014 and below its lowest level during the pandemic. Respondents surveyed from Sept. 1-23 frequently cited the cost of gasoline, goods and services. Their assessment of the present situation fell 7.9 points to 109.3, and their short-term outlook fell 5.9 points to 63.6.
Spending and Wealth Move Unevenly
Consumer spending rose 0.9% in August from July, or 0.6% after adjusting for inflation. It marked the strongest monthly gain since March 2025. The personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, showed price increases stabilizing as consumers continued to spend. Consumer spending accounts for about 70% of U.S. economic activity.
The Associated Press reported that a strong stock market supported spending and increased the resources of wealthy investors, with market enthusiasm tied to artificial intelligence. The S&P 500 rose to within 0.8% of its August record after lower bond yields following the jobs report eased investor concerns that a hot economy might push the Federal Reserve to raise interest rates at its next meeting. The Dow Jones Industrial Average and Nasdaq composite also advanced.
Bank of America said its customers were increasing discretionary spending on goods and services “because they want to and not because they have to.” That growth came alongside weak hiring and wage increases that failed to match consumer prices.
The economy grew at a 2.2% annual pace from April through June, according to the Commerce Department, above its previous estimate of 1.5%. Consumer spending grew at a 3.8% annual pace in the second quarter, up from 0.7% in the first quarter.
Political Claims and the Cost of Credit
President Trump described the economy as strong and said the missing element was “good public relations.” He campaigned for Republicans in Alabama, Oklahoma, Texas and Washington, pointing to economic growth, financial markets and increased construction. His aides cited a burst of construction hiring in September, even as overall hiring cooled and Americans faced higher costs for gasoline, auto loans, credit cards and mortgages.
Freddie Mac reported that the average 30-year fixed mortgage rate rose to 7.28%, its sixth consecutive weekly increase, from 7.03% the previous week. The average had been 6.34% a year earlier. The 15-year rate climbed to 6.60% from 6.42% the previous week.
The Federal Reserve raised interest rates at its previous meeting. The Fed scheduled the minutes from its most recent meeting for release Wednesday, with details expected on its decision and views on inflation and the job market. Weekly unemployment claims were due Thursday, and the University of Michigan’s October consumer sentiment survey was scheduled for Friday.