U.S. Added Just 29,000 Jobs in September

The U.S. economy added only 29,000 jobs in September, a sharply weaker result than economists had expected, while the unemployment rate ticked up to 4.2% from 4.1%. The soft report — the last before the Nov. 3 midterm elections — points to a labor market that has lost momentum and reduces the likelihood the Federal Reserve will raise interest rates again at its meeting later this month.

According to NPR, employers added just 29,000 jobs last month, far fewer than forecasters anticipated. Job gains for July and August were revised down by a combined 60,000, pushing July’s total into negative territory with a loss of 10,000 positions. The Bureau of Labor Statistics data underlying the figures was cited by all major outlets; the agency’s own release was not directly accessible.

A ‘Low-Hire, Low-Fire’ Market

The weak headline number did not reflect widespread layoffs. Most industries continued to add workers, though at a slow pace. Even healthcare, a reliable engine of job growth, added just 17,000 positions. Construction added 11,000, manufacturing 9,000, and restaurants and bars 11,000 — roughly a third of all jobs created during the month.

The losses were concentrated in government, which shed 17,000 jobs, and in temporary help services, down 11,000. Information services lost 10,000 positions amid concerns about artificial intelligence, while financial activities dropped 7,000, CNBC reported.

The report paints a picture of a “low-hire, low-fire” economy, in which jobless claims remain low and layoffs are rare, but turnover has stalled and opportunities for new entrants are scarce.

“The good news is you’re not seeing a lot of layoffs,” Sarah House, senior economist at Wells Fargo, told NPR. “But it’s really hard if you are one of those workers who loses your job or you’re new to the labor force or you’re coming back, there’s not a lot of turnover. So it makes it harder to get your foot in the door right now.”

Wages Fall Behind Inflation

Beneath the headline payroll figure, the report contained other signs of a cooling labor market. Average hourly earnings rose just 0.1% in September, putting the 12-month gain at 3.0% — the lowest annual rate since May 2021, and below the roughly 3.1% Wall Street had expected. The average work week was unchanged at 34.6 hours.

With inflation running above the Fed’s 2% target, that pace of wage growth is roughly at or below the rate of price increases, eroding workers’ real buying power.

“Americans are frustrated by the lack of opportunities right now,” Heather Long, chief economist at Navy Federal Credit Union, told CNBC. “Wage growth fell to a new 5-year low and is being wiped out entirely by inflation. That stings heading into the holidays.” Long nonetheless described the labor market as “stable” and said she does not think it will dissuade the Fed from hiking in December.

The household survey, which is used to calculate the unemployment rate, was considerably stronger than the establishment survey used to derive the payrolls count. Household employment rose by 406,000, while the labor force swelled by 485,000 and the participation rate rose 0.2 percentage point to 61.8%, its highest since May. The broader U-6 measure, which includes discouraged and part-time-for-economic-reasons workers, edged down to 7.6%, its lowest since January 2025.

The divergent readings help explain why the unemployment rate rose even as layoffs remained historically low: the increase was driven largely by an influx of new workers entering the labor force, not by a wave of job losses.

Pressure on the Fed

The soft report lands squarely in the middle of the Fed’s debate over how to balance a cooling labor market against inflation that has stayed stubbornly high. The central bank raised its benchmark rate by a quarter point in September — its first hike in three years — citing core inflation of about 3% a year. The Fed chair, Kevin Warsh, said at the time that the labor market “is basically running consistent with full employment,” but added that “inflation is too high and has been for too long.”

Markets read the September jobs report as a reason for the Fed to pause. Stock futures rose and Treasury yields slumped after the release, and market-implied odds that the Fed will hold rates steady at its Oct. 27–28 meeting jumped to 82.8%, according to the CME Group’s FedWatch tool. Investors still expect at least one more hike before the end of the year, now most likely in December.

“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 cited by CNBC. “The payroll data surged in August, and we had expected the momentum to continue this month… However, it now appears that the August number was nothing more than a rebound from very weak hiring in June and July.”

The official report also contrasted with private-sector data released earlier in the week by payroll firm ADP, which had shown a rosier picture of private hiring accelerating by 90,000 jobs.

A Jobs-Growth Puzzle

The weak hiring figures sit uneasily alongside signs of robust growth elsewhere in the economy. The Commerce Department recently revised first- and second-quarter GDP growth up to 2.5% and 2.2%, respectively, and the Atlanta Fed is tracking third-quarter growth at 3.7%. That “weak jobs, strong growth” divergence has puzzled economists.

Households, meanwhile, are contending with a broader rise in borrowing costs. Mortgage rates jumped from 7% to 7.28% this week — the largest weekly increase since 2022. The 10-year U.S. Treasury yield, which underpins mortgages and other loans, reached a 24-year high as a global bond sell-off intensified. Higher energy prices tied to the U.S.-Israel war on Iran have added to the strain; researchers at Brown University, whose Iran War Energy Cost Tracker is updated daily, estimate that higher gasoline and diesel prices have cost Americans hundreds of dollars per household since the conflict began in February.

The report also revealed a widening racial gap in the labor market: unemployment among Black Americans rose a full percentage point to 7%, roughly double the rate for white Americans, according to The Guardian.

What’s Next

The September report is the last comprehensive snapshot of the labor market before voters go to the polls in November, giving it outsize political salience as candidates on both sides campaign on cost-of-living concerns. The Fed’s next meeting on Oct. 27–28 now appears likely to end with rates unchanged, shifting the focus to December — and to whether a labor market that is no longer adding many jobs can coexist with an inflation rate still running hot.

For now, the headline number is one more data point suggesting an economy that is growing without generating the kind of hiring that gives workers leverage on pay. Whether that proves a temporary soft patch or a more durable slowdown may determine the Fed’s next move — and, potentially, the political weather in November.