U.S. Added Just 29,000 Jobs in September, Missing Forecasts as Unemployment Rises to 4.2%
Revisions wiped out another 60,000 jobs from July and August, and investors now expect the Federal Reserve to hold rates at its October meeting.
The U.S. economy added only 29,000 jobs in September, far short of the roughly 84,000 economists had expected, and the unemployment rate climbed to 4.2 percent, the Labor Department reported Friday.
The gain was also well below the average of 45,000 jobs a month over the previous 12 months, confirming a hiring slowdown that has dragged on for more than a year. Forecasters surveyed by Bloomberg had projected a 4.1 percent jobless rate. Instead, 7.1 million Americans were counted as unemployed.
The report also reached backward and made earlier months look worse. July payrolls, first reported as a gain of 21,000 jobs, were revised to a loss of 10,000. August was revised down to 133,000 from 162,000. Together, the two revisions removed 60,000 jobs from the previously reported count.
Health care, which has carried much of the hiring in recent years, added 17,000 jobs, about half its monthly average of 33,000. Construction added 11,000 jobs and manufacturing 9,000. Financial activities shed 7,000 jobs and have now lost 129,000 positions since May 2025.
Wage growth was modest. Average hourly earnings for private-sector workers rose 5 cents, or 0.1 percent, to $37.81 in September. Over the past 12 months, pay is up 3.0 percent.
The weak number was a sharp turn from the private-sector data that came out earlier in the week. The payroll processor ADP reported on Wednesday that private employers added 90,000 jobs in September, better than expected, which had set up hopes for a firmer government report.
Financial markets treated the miss as a signal that the Federal Reserve will leave interest rates where they are at its October meeting. Stock futures rose and Treasury yields retreated after the release. The 10-year Treasury yield had touched 5.33 percent on Thursday, its highest level since April 2002, in the worst quarter for the bond market this century, so any relief in yields was closely watched.
The data lands in an unusual place for the Fed. Inflation has stayed above the central bank's target, energy prices have been pushed up by the war with Iran, and bond investors have been betting on tighter policy. A labor market that is barely growing makes it harder for policymakers to argue for more tightening, but it also leaves little room to cut while prices are still rising.
For workers, the picture is a labor market that is adding very few jobs, even as it has not yet begun to shed them in large numbers. The downward revisions to July and August are a warning that earlier reports were too optimistic.
The next jobs report is due in early November. The Fed's October meeting will be the first test of how policymakers weigh a stalled job market against inflation that has refused to come down.
