September Jobs Report Shocks With Weakest Hiring in Over a Year

A Stunning Miss That Has Everyone Talking

The U.S. economy created far fewer jobs than expected in September, pointing to a surprising soft spot in the labor market. Nonfarm payrolls rose a seasonally adjusted 29,000 for the month, while the unemployment rate increased to 4.2%. That number didn't just fall short — it fell off a cliff. The 29,000 figure came in well below the 84,000 forecast, while economists had also expected the unemployment rate to hold steady at 4.1%.

The September report marks a sharp reversal from August, when the economy added 162,000 jobs, far exceeding expectations in what was the strongest monthly gain since March. That whiplash — from a blockbuster month to one of the weakest on record in recent years — has left analysts scrambling for explanations and ordinary workers wondering what it means for their own financial security.

The Numbers Beneath the Numbers

In addition to the weakness in September, the August jobs count was revised lower to reflect a gain of 133,000, while July switched from a gain to a loss as payrolls fell by 10,000. The revisions in total showed 60,000 fewer jobs than previously reported. In other words, the labor market wasn't just weak in September — it was weaker than we thought in the months before it, too.

Average hourly earnings edged up a weaker-than-expected 0.1% from August and rose 3% compared with a year earlier — the slowest annual wage growth since 2021 and probably trailing inflation for the sixth consecutive month. That's a meaningful blow to household budgets. When paychecks grow more slowly than prices, workers effectively take a pay cut — even when they're still employed.

The number of long-term unemployed — defined as those who have been jobless for 27 weeks or more — was essentially unchanged at 1.9 million in September. The long-term unemployed accounted for 27.1% of all unemployed people. That persistent core of workers who can't find their footing remains one of the more troubling undercurrents of an otherwise historically stable labor market.

A Silver Lining — Sort Of

The unemployment rate unexpectedly rose to 4.2%, though that partly reflected an increase in the participation rate to a four-month high of 61.8%, which is a positive sign. More people actively looking for work is generally good news — it suggests confidence in the job market, even if the market itself is struggling to keep up with that demand right now.

The job market has mostly been holding up despite a growing list of threats to hiring, from an aging population and the rapid adoption of AI to higher oil prices, policy uncertainty, and the war with Iran. The healthcare sector added 17,000 jobs, well below the average monthly gain during the prior 12 months of 33,000, while manufacturing gained 9,000 jobs. Tepid gains across the board — no single sector carried the load.

What This Means for the Fed — and for You

Fed pause odds surged to 85% after the weak jobs report, as Kalshi priced in an 85% chance the Fed holds rates in October after payrolls rose just 29,000 versus 84,000 expected. The unemployment climb to 4.2% triggered a sharp dovish repricing of the Fed outlook. Simply put, a central bank that was weighing further rate hikes now has a strong reason to stand down — at least for now.

The latest jobs report is also the final official employment snapshot before the midterm elections , making it politically charged as well as economically significant. Taken together, the data suggest the labor market remained healthy in September from a historical perspective, with conditions similar to those in recent months — but one more report like this and that characterization will be harder to defend. Whether September proves to be a one-month stumble or the start of a broader slowdown is the question every economist, policymaker, and job-seeker will be watching closely in the weeks ahead.