Key points

  • US nonfarm payrolls increased by 29,000 in September, well below the 90,000 median forecast in a Reuters survey.
  • The unemployment rate edged up to 4.2% while labor-force participation was little changed at 61.8%.
  • July and August payroll gains were revised down by a combined 60,000, and annual wage growth eased to 3.0%.

US job growth slowed sharply in September, adding to evidence that employers are hiring cautiously even as large-scale layoffs remain limited. Nonfarm payrolls increased by 29,000, the Bureau of Labor Statistics said on October 2, while the unemployment rate edged up to 4.2%. The payroll gain was far below the 90,000 median forecast in a Reuters survey of economists and marked a significant step down from August's revised increase of 133,000.

A weaker headline and softer revisions

The latest figures were accompanied by downward revisions to the prior two months. July payrolls were revised to a loss of 10,000 from a previously reported gain of 21,000, while August was lowered by 29,000 to 133,000. Together, July and August employment gains were 60,000 lower than previously reported. The revisions matter because they show the September slowdown was not an isolated weak reading: job creation has been more subdued across the quarter than the initial estimates suggested.

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Unemployment remains in a narrow range

The unemployment rate moved to 4.2% from 4.1% in August, and the number of unemployed people was little changed at 7.1 million. BLS said the rate has stayed between 4.1% and 4.3% since March. Labor-force participation was also little changed at 61.8%, while the employment-population ratio held at 59.2%. Those measures point to a labor market that is losing hiring momentum without showing the broad deterioration normally associated with a sharp downturn.

Industry gains were limited

Employment changed little across every major industry in September. Health care continued to trend higher with 17,000 additional jobs, supported by ambulatory services and hospitals, though nursing and residential care facilities lost 9,000 positions. Construction employment was little changed after adding 11,000 jobs, and manufacturing was also little changed with a gain of 9,000. Financial activities shed 7,000 jobs and remained 129,000 below its May 2025 peak. Leisure and hospitality, retail, transportation and government also recorded little change. The narrow distribution of gains reinforces the picture of restrained demand for workers rather than a single-sector distortion in the headline total.

Wage pressure eased

Average hourly earnings rose by 5 cents, or 0.1%, to $37.81 in September. Earnings were 3.0% higher than a year earlier, down from the 3.1% annual pace reported for August. The average workweek was unchanged at 34.4 hours. Slower wage growth reduces one potential source of inflation pressure, but it also means households are receiving less support from rising labor income at a time when hiring is cooling.

Why the report matters for markets

The employment report arrives as the Federal Reserve weighs persistent inflation against signs of slower labor demand. Reuters had described the pre-release environment as a low-hire, low-fire market, with historically low layoffs helping to keep employment stable even as companies remained reluctant to expand. September's 29,000 payroll gain, the higher unemployment rate and the downward revisions strengthen the evidence of cooling. Still, the jobless rate remains historically low and participation did not fall, so the report does not by itself establish a recessionary turn. For investors and policymakers, the next inflation readings will be important in determining whether weaker hiring is enough to change the balance of risks around interest rates.

Sources

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