Employers across the U.S. added 29,000 jobs in September, short of forecasts
September Hiring Slows as Employers Add Just 29,000 Jobs
Wertynews.com – U.S. employers added 29,000 jobs in September, a result that fell far short of the 90,000 positions economists had expected. The report points to a labor market facing increased pressure from high energy costs, persistent inflation and more cautious hiring decisions by businesses.
The unemployment rate moved to 4.2% in September from 4.1% a month earlier. While the increase was modest, the combination of weaker payroll growth and a higher jobless rate has drawn fresh attention to whether the labor market is cooling gradually or losing momentum more quickly.
Earlier Job Gains Were Revised Lower
The latest figures also included substantial revisions to the previous two months. Payroll gains for July and August were reduced by a combined 60,000 jobs, changing the picture of what had appeared to be a stronger late-summer rebound.
“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.”
Steve Rick, chief economist at TruStage, said the downward revisions put August’s improvement into clearer perspective. The changes matter because employment reports are often reassessed as more complete employer data becomes available. A headline number may shape immediate market reaction, but the broader multi-month pattern typically provides a more reliable view of hiring conditions.
Employment growth had shown improvement compared with last year, when businesses added an average of only 10,000 jobs per month. September, however, raised questions about whether that recovery can continue after August’s stronger reading and the Federal Reserve’s first interest-rate increase 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 the report warrants close scrutiny. Interest-rate decisions can affect hiring because higher borrowing costs may make companies more reluctant to finance expansion, invest in equipment or add staff.
Healthcare Remains Positive, but Growth Is Limited
Hiring was subdued across much of the economy. Healthcare, which has been one of the most dependable contributors to job creation this year, added 17,000 jobs in September. Construction also posted hiring, but the gains were limited. Financial services firms moved in the opposite direction, cutting 7,000 jobs during the month.
“Only healthcare and construction were hiring, and it was weak.”
Heather Long, chief economist at Navy Federal Credit Union, said the limited hiring is contributing to public frustration over the availability of work. For people seeking a new role, returning to work or trying to improve their pay, slower job creation can mean fewer openings and longer searches even when layoffs remain relatively low.
“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 jobs report does not suggest a broad wave of dismissals. Data released Thursday by Challenger, Gray & Christmas showed that announced job cuts have declined sharply in 2026. Through September, layoffs were down 40% from the same period a year earlier. September cuts also fell 20% from September 2025, reaching their lowest monthly level in four years.
That distinction is important for households and policymakers. A labor market can weaken through reduced hiring before layoffs become widespread. Employers may preserve existing staff while pausing recruitment, leaving workers employed but giving job seekers fewer choices. The September figures fit that more cautious pattern.
Pay Growth Trails Inflation
Wage growth remains another concern. Pay rose at a 3% annual rate in September, below the 3.4% annual inflation rate recorded in the August Consumer Price Index. September consumer-price data is scheduled for release on Oct. 14.
When prices rise faster than wages, purchasing power declines. Families may find that paychecks do not stretch as far for essentials such as fuel, food, housing and other routine expenses. Energy costs have been a major factor in the recent inflation pressure.
“Inflation has wiped out wage gains since March. That's a real financial squeeze.”
Long said September’s wage increase was the weakest since May 2021. The slowdown in earnings growth is especially significant because wage gains can help consumers absorb higher prices. Without comparable pay increases, elevated inflation can weigh more heavily on household budgets.
What the Numbers Could Mean for Federal Reserve Policy
The September data arrive as the Federal Reserve seeks to bring inflation back toward its 2% annual target. The central bank raised its benchmark interest rate last month for the first time in more than three years, following an August inflation reading of 3.4%.
Tempelman said the rise in unemployment deserves careful attention. Softer hiring and increasing joblessness could indicate that further rate increases would place additional limits on economic activity. At the same time, inflation remains above the Federal Reserve’s target, leaving policymakers to balance price stability against the risk of unnecessarily weakening employment.
Ken Mahoney, CEO of Mahoney Asset Management, said the September employment figures do not support an October rate increase on their own.
“For the Fed, these numbers do not make a case for a rate increase in October. 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 employment backdrop can give the Federal Reserve more flexibility as it considers future rate moves. But September’s unexpectedly low job gain, the revisions to earlier reports and wage growth below inflation all add uncertainty to that outlook. The next inflation reading and future employment reports will help determine whether the labor market is merely cooling or entering a more difficult phase.
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