U.S. Hiring Slows Sharply as Economy Adds Just 29,000 Jobs in September

The U.S. labor market lost momentum in September, with employers adding just 29,000 jobs as the unemployment rate edged up to 4.2%, according to data released Friday by the Bureau of Labor Statistics.

The report offers a more cautious picture of the economy than earlier estimates suggested. Payroll gains for July and August were revised down by a combined 60,000 jobs. July, initially reported as a gain of 21,000, was revised to a loss of 10,000. August was revised from 162,000 jobs to 133,000.

Taken together, September’s increase was about 36% below the average monthly gain of 45,000 jobs over the previous year. It was also a sharp slowdown from August’s revised total, reinforcing signs that employers are becoming more hesitant to expand payrolls.

Still, the report does not describe a labor market in free fall. The unemployment rate rose from 4.1% to 4.2%, remaining within the narrow range seen since March. The number of unemployed people reached about 7.1 million, while the labor-force participation rate increased to 61.8%.

That combination matters. The unemployment rate can rise when layoffs increase, but it can also move higher when more people begin looking for work and have not yet found jobs. In September, the civilian labor force grew by 485,000 people, while the number of unemployed rose by 78,000. The figures suggest that at least part of the increase in unemployment reflected a larger pool of job seekers rather than a sudden wave of layoffs.

Job creation was uneven but subdued across most industries. Health care continued to add workers, though its 17,000-job increase was roughly half its average monthly gain over the prior year. Construction added 11,000 jobs, while manufacturing employment rose by 9,000. Financial activities lost 7,000 jobs and has shed 129,000 positions since reaching a recent peak in May 2025.

The report also offers little evidence of a new wage surge that might keep inflation elevated. Average hourly earnings for private-sector workers rose by 5 cents in September, or 0.1%, to $37.81. Pay was up 3.0% from a year earlier. The average private-sector workweek held steady at 34.4 hours.

For households, the practical message is mixed. Workers who already have jobs are not facing evidence of a broad employment shock, and wage growth continues. But people seeking work may encounter a market with fewer openings and less hiring momentum. A low-layoff environment can feel stable for current employees while still being frustratingly difficult for job seekers.

Financial markets initially treated the weak report as evidence that the Federal Reserve may face less pressure to raise interest rates, Reuters reported. AP reported that stocks rose after the data eased concerns that an overheated economy could worsen inflation. That reaction captures the central tension in the numbers: weaker hiring is bad news for workers and a warning about economic momentum, but it can be viewed positively by investors if it reduces inflation risk.

The next test will be whether September proves to be an isolated soft month or part of a longer slowdown. The BLS is scheduled to release the October employment report on November 6. Until then, the revisions may be nearly as important as the headline number: they show that the labor market had already been weaker than it appeared.