Employers across the U.S. added 29,000 jobs in September, short of forecasts
Employers across the U.S. added 29,000 jobs in September, below economists' forecasts and signaling that some businesses are holding off on hiring amid headwinds such as surging energy prices and higher inflation.
Economists had forecast the economy would add 90,000 new jobs last month, according to financial data firm FactSet. The unemployment rate stood at 4.2% in September, up slightly from 4.1% in the prior month.
Cooler hiring in July and August
Recent data suggest the labor market has picked up since last year, when employers added an average of just 10,000 new jobs per month. But the September report suggests that hiring may be flagging after August's strong employment report and the Federal Reserve's first interest rate hike in three years.
"September's nonfarm payroll gain of just 29,000 jobs raises questions about the durability of the labor market after the Federal Reserve's first interest rate increase since 2023," Jerry Tempelman, vice president of economic and fixed income research at Mutual of America, said in an email.
Hiring was muted across industries, with even healthcare, this year's bright spot in job growth, adding just 17,000 new hires, experts noted. Financial services firms, meanwhile, shed 7,000 jobs last month.
"Only healthcare and construction were hiring, and it was weak," said Heather Long, chief economist at Navy Federal Credit Union. Americans are frustrated by the lack of opportunities right now. "Across America, people don't like this labor market. It's not hard to see why. There's still not much hiring going on."
The Labor Department on Friday also revised down the payroll gains for July and August by a combined 60,000. The downward revisions put August's "rebound into perspective," said Steve Rick, chief economist at financial services firm TruStage, in an email. "One month doesn't make a trend, and monthly payroll numbers can bounce around quite a bit. What matters more is whether the three-month trend continues to show a labor market that is gradually cooling rather than falling off a cliff."
Economists are closely watching other measures of labor market strength, such as wage growth, which has lagged inflation for five consecutive months. In September, wages rose at an annual rate of 3%, below the August Consumer Price Index reading of 3.4%. The September CPI data will be released on Oct. 14.
September's wage growth is "the lowest since May 2021," Long said. "Inflation has wiped out wage gains since March. That's a real financial squeeze."
Data released Thursday by outplacement firm Challenger, Gray & Christmas shows that job cuts have fallen sharply in 2026. Layoffs through September have declined 40% from the same period a year earlier, its report found. On a monthly basis, layoffs dropped 20% compared with September 2025, marking the lowest level in four years.
What it means for interest rates
The increase in the nation's unemployment rate "warrants close attention," Tempelman said. Rising joblessness combined with softer hiring could signal that additional Fed interest rate hikes could constrain economic activity, he added.
The weaker-than-expected September jobs data could cause the Federal Reserve to hold off on an additional rate cut at its October meeting, said Ken Mahoney, CEO of Mahoney Asset Management, in an email.
"For the Fed, these numbers do not make a case for a rate increase in October," he said. "A hike would have to come from the inflation data, not from a labor market that produced 29,000 jobs against a 90,000 estimate and then subtracted 60,000 from the prior two months."
A stable labor market gives the Federal Reserve more room to raise interest rates in the coming months, according to economists. The central bank is focused on driving inflation down to its 2% annual target and last month raised its benchmark interest rate for the first time in more than three years.
In August, U.S. inflation rose at an annual rate of 3.4%, as soaring energy costs pushed up consumer prices.
