US Adds Just 29,000 Jobs in September as Unemployment Rises to 4.2%

The US economy added just 29,000 jobs in September 2026, far below market expectations, while the unemployment rate rose to 4.2%, reinforcing signs that hiring has slowed sharply even though large-scale layoffs remain limited.

The Bureau of Labor Statistics said on October 2 that nonfarm payroll employment changed little during the month. Economists surveyed ahead of the report had expected an increase of about 90,000 jobs, while the unemployment rate had been expected to remain around 4.1%.

The report also contained significant downward revisions to earlier months. July payrolls were revised from a gain of 21,000 to a loss of 10,000, while August was revised from 162,000 to 133,000. Combined, the two months now show 60,000 fewer jobs than previously reported.

September Job Growth Was Well Below Expectations

The 29,000 increase was substantially weaker than the roughly 90,000 jobs economists had expected.

It also came after a downwardly revised 133,000 increase in August and a 10,000 decline in July.

Over the previous 12 months, payroll employment had increased by an average of about 45,000 jobs per month, according to BLS. That is considerably slower than the hiring pace seen during earlier stages of the post-pandemic expansion.

The three-month average through September was around 51,000 jobs, highlighting the broader slowdown even though month-to-month figures remain volatile.

Unemployment Rises to 4.2%

The unemployment rate increased to 4.2% from 4.1% in August, while the number of unemployed people stood at about 7.1 million.

BLS said the unemployment rate has remained within a narrow range of 4.1% to 4.3% since March, suggesting that the latest increase represents continued softness rather than a sudden break in labor-market conditions.

The labor-force participation rate was 61.8%, while the employment-to-population ratio remained at 59.2%. Both measures changed little during the month.

The number of long-term unemployed, defined as people without work for 27 weeks or more, remained around 1.9 million, accounting for 27.1% of all unemployed people.

Healthcare Continued to Add Jobs

Hiring was limited across most major industries.

Healthcare added about 17,000 jobs in September, continuing its upward trend but at roughly half the average monthly pace of the previous 12 months.

Ambulatory healthcare services added around 13,000 jobs and hospitals added 12,000, while nursing and residential-care facilities lost approximately 9,000 positions.

Construction employment increased by about 11,000, broadly in line with its recent trend.

Manufacturing added roughly 9,000 jobs, with gains in machinery and plastics and rubber products. Manufacturing employment was about 72,000 higher than its recent low in December 2025.

Some Service Industries Lost Jobs

Several sectors moved in the opposite direction.

Information employment declined by around 10,000 jobs, while professional and business services fell by roughly 9,000.

Temporary-help services, often watched as an indicator of near-term employer demand, lost about 10,900 jobs during the month.

Financial activities declined by approximately 7,000 jobs and remained 129,000 below their May 2025 peak, with most of that longer-term decline concentrated in insurance-related employment.

Government employment fell by around 17,000, offsetting part of the private-sector increase. Total private payrolls rose by about 46,000.

BLS nevertheless characterised changes across all major industries as relatively small during September.

Wage Growth Also Cooled

Average hourly earnings for private-sector workers rose by just 0.1% in September, or five cents, to $37.81.

Compared with a year earlier, average hourly earnings were up 3.0%, down from 3.1% annual growth in August.

The average private-sector workweek remained unchanged at 34.4 hours.

Slower wage growth adds to evidence of a cooler hiring environment, though wage data alone do not determine the overall strength of the labor market.

Job Openings Remain High, While Layoffs Stay Low

Other labor-market indicators point to a market that has weakened without entering a broad layoff cycle.

The latest Job Openings and Labor Turnover Survey showed 7.1 million job openings in August, little changed on the month, while employers hired about 5.2 million people.

Layoffs and discharges stood at around 1.6 million, with a rate of 1.0%, and were essentially unchanged.

That combination helps explain why economists have described the current environment as one of cautious hiring rather than widespread job destruction.

Employers appear reluctant to expand payrolls aggressively, but many are also holding onto existing workers.

Revisions Reinforce the Hiring Slowdown

The downward revisions to July and August are important because they reduce the apparent strength of the recent labor-market rebound.

July is now estimated to have lost 10,000 jobs rather than adding 21,000, while August's gain has been cut to 133,000 from the originally reported 162,000.

That leaves total payroll growth over the last three months considerably weaker than first thought.

The revisions reflect additional employer survey responses and updated seasonal adjustments rather than a change in the underlying methodology.

What the Report Says About the Labor Market

The September figures point to a labor market that is expanding only slowly.

Job creation is concentrated in a relatively small number of areas such as healthcare and construction, while several service industries are flat or losing positions.

At the same time, unemployment remains historically moderate, layoffs remain contained and job openings are still measured in the millions.

Those facts support a picture of weaker hiring momentum rather than a sudden employment collapse.

The report does not, by itself, establish what will happen next to economic growth or monetary policy.

Federal Reserve officials have indicated that they will continue evaluating labor-market and inflation data before making future policy decisions.

Conclusion

The September jobs report showed a clear loss of momentum in the US labor market.

Payroll employment increased by just 29,000, well below expectations, while the unemployment rate moved up to 4.2%.

The report also revised July and August payrolls down by a combined 60,000 jobs, leaving recent job creation weaker than previously estimated.

Healthcare, construction and manufacturing continued to add workers, while information, professional services, financial activities and government recorded declines or little growth.

Even so, the broader data do not show a widespread wave of layoffs. Job openings remained at about 7.1 million in August and layoffs stayed relatively low.

The clearest signal from the September report is therefore not that the labor market has collapsed, but that hiring has become significantly more cautious and job growth is running at a much slower pace than in earlier years.

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