September jobs report shows slowdown in hiring, unemployment ticks up - USA Today

The Labor Department estimates U.S. employers added 29,000 jobs in September, a month when Federal Reserve officials viewed the labor market as stable even as economists said it remained challenging for unemployed workers to break in. 

Payroll gains for past months were revised down, reflecting fewer summer hires than previously reported. The department now estimates U.S. employers added 133,000 jobs in August and lost 10,000 jobs in July.

The national unemployment rate ticked up to 4.2% in September, up from 4.1% the month before. The labor force participation rate rose to 61.8%, up slightly from the 61.6% rate recorded in August after falling earlier this year.

Average hourly earnings for employees on private, nonfarm payrolls — calculated as a mean — rose by 5 cents to $37.81 in September, the department said. Over the year, they increased 3%. The department's September inflation report, due out Oct. 14, will reveal whether paychecks kept pace with rising prices last month. They did not in August and July.

"Even after payrolls’ disappointment, job growth’s pace in the last three months is around the top of economists’ estimates of the rate needed to hold the unemployment rate steady," Bill Adams, Fifth Third Commercial Bank's chief U.S. economist, said in a note. "But slowing wage growth even as inflation accelerates is a sign that workers are having a hard time moving up to better paying jobs, even if outright unemployment is low." 

Fed officials will review both reports ahead of their next interest rate decision on Oct. 28. In September, policymakers appeared focused on inflation after they voted to raise their benchmark for short-term interest rates.

U.S. employers added 29,000 jobs in September and payroll gains for August and July were revised down.

The unemployment rate ticked up for the first time since February this year.

September's payroll gains were driven by a 17,000 increase in health care employment.

Hiring also picked up in construction, which added 11,000 jobs. The manufacturing sector added 9,000.

Financial services shed 7,000 jobs in September, and employment in that industry was down by 129,000 since a recent peak in May 2025.

Employment was little changed in other industries, including social assistance, leisure and hospitality, and professional and business services, the department estimated.

The department's jobs report is considered the gold standard for data about the labor market, but it's not the only one that offers insight into hiring trends.

ADP’s National Employment Report released Sept. 30 found private employers added a much-higher 90,000 jobs in September. It said that the most notable gains were in education and health services, leisure and hospitality, manufacturing, and construction.

Visualize the U.S. job market as a single storefront. It has a front door and a back door. 

When there is typical labor market churn, people are regularly exiting the back door, whether to retire or for another opportunity. In response, the business hires more people, bringing them through the front door. 

"What has happened is the flow on the back end has stalled massively," Laura Ullrich, Indeed Hiring Lab's economic research director said. 

Low quits rates show workers are still clinging to their jobs, fearing they won't be able to land another. They may not feel happy about it — Glassdoor's Employee Confidence Index showed employee confidence fell to a new record low in September — but they are employed. 

"If you don't have a job and you're on the sidewalk trying to get into the building, it's really hard and very frustrating," Ullrich said.

According to Federal Reserve Chair Kevin Warsh, the labor market is "stable."  

From February 2022 to mid-2024, the unemployment rate was below 4%. A few years ago, U.S. employers were adding more jobs, wages were outpacing inflation, and there were more Americans joining the workforce, according to Kory Kantenga, LinkedIn’s head of economics for the Americas. 

Although the unemployment rate remains historically low, he said today's labor market does not offer workers a sense of abundant opportunity. 

"This is not a labor market that people find favorable, especially in the face of higher costs," he added. "The way that we often overcome higher costs is we find a new job that pays more, and if that's not an option because hiring is so slow, that really changes how people experience and feel the labor market."

U.S. employers announced plans to hire 90,787 workers in September, a significant increase from August when they announced plans to hire 12,325, according to an Oct. 1 Challenger, Gray & Christmas report. 

Seasonal hiring may be behind that jump, but compared to the same time last year, hiring announcements were down 23%. Last month marked the lowest September total since 2011, the report said. 

It also found U.S. employers announced plans to cut 43,281 jobs last month, down 20% from the same time last year and the lowest September total since 2022. Layoff announcements were most common at tech companies, food producers, and nonprofit organizations. "Market and economic conditions" was the most cited reason for cuts. 

“Employers are facing high energy costs, an uncertain war in Iran, a rate hike that could make hiring more expensive, plus the likelihood of surging healthcare costs," Andy Challenger, workplace expert and chief revenue officer at the firm behind the report, said in a statement. “Hiring plans are up over the year, but we’re not seeing the surge of hiring plans that come with the holiday season, which suggests a very cautious approach."

The Federal Open Market Committee has two main goals. Warsh said in September he believed it had delivered on the first, which is to keep the unemployment rate low. It's still working on the second, which is to ensure price stability. 

To combat inflation that has remained above the Fed's 2% target for five years, the committee voted to raise its benchmark for short-term interest rates at its last meeting. The question is whether they will do it again. 

The September jobs data "reduces any sense of urgency to tighten policy in October and pushes back against some of the more hawkish expectations that had emerged in recent weeks," according to Angelo Kourkafas, a senior global strategist at Edward Jones. 

To Adams, the "mediocre" report wasn't weak enough to shift policymakers' focus away from inflation. 

"The September CPI and PPI reports, prices at the pump, and geopolitical developments between now and when the Fed meets next in late October have more power to sway the next rate decision than this jobs report," Adams said in the note. 

The day before the job report's release, 76% of traders were betting the Fed would hold the federal funds rate steady at its October meeting and 62% were predicting it would raise it by a quarter-point in December, according to CME FedWatch. After its release, 82% are betting on a pause this month, and 62% are still betting on a quarter-point hike in December. 

(This story was updated to add new information.)

Reach Rachel Barber at rbarber@usatoday.com, follow her on X @rachelbarber_, and subscribe to her newsletter "Making More of Your Money" here.