U.S. Added Just 29,000 Jobs in September as Hiring Stalls

U.S. employers added just 29,000 jobs in September — far fewer than the 90,000 economists had expected — as hiring nearly ground to a halt in a labor market economists describe as "low-hire, low-fire."

The Labor Department's report, released October 2, also showed the unemployment rate ticking up to 4.2% from 4.1% as more people entered the workforce. Wage growth cooled to 3.0% year over year.

The picture looked worse in the rearview mirror. August's job gains were revised sharply down to 133,000 from the 162,000 first reported, and July was revised to show a loss of 10,000 jobs — meaning hiring was weaker in recent months than first thought.

By industry, health care led with 17,000 new jobs, roughly half its 12-month average. Construction added 11,000 and manufacturing gained 9,000. Financial activities shed 7,000 jobs, and information lost 10,000.

Economists urged caution on the headline number. Payrolls have a tendency to underperform when Labor Day falls late in September, as it did this year, and seasonal adjustments can swing a single month's figure in either direction. Meanwhile, there are no signs of broad layoffs: first-time applications for unemployment benefits have been hovering at 57-year lows.

Wall Street treated the report as good news for interest rates. Stocks rose after the release — the S&P 500 gained 0.9% and the Nasdaq 1.2% — as traders slashed bets on another Federal Reserve rate hike at the October 28 meeting. The Fed raised rates in September for the first time since 2023, and markets had been pricing in a second straight hike; those odds collapsed to roughly 15% after the jobs report and dovish remarks from New York Fed President John Williams.

The bigger risk, economists warned, may be ahead: headwinds from the U.S.-Israeli war with Iran — including high energy prices and strained supply chains — could start disrupting the labor market by the end of this year and into 2027.

Sources: Reuters, U.S. Bureau of Labor Statistics, Reuters Instant View.