The headline numbers and revisions
September's hiring was a letdown. The Bureau of Labor Statistics reported just 29,000 additional nonfarm jobs, missing a Dow Jones consensus that had penciled in 84,000 along with a 4.1% unemployment rate. The jobless rate instead moved up to 4.2%.
Prior months were marked down too. August is now estimated at a 133,000 gain, and July flipped from a small increase to a 10,000 decline. In total, those revisions removed 60,000 jobs from earlier tallies.
What the surveys, pay, and sectors show
Under the hood, the two employment surveys told different stories. The establishment survey was soft, but the household survey showed momentum: household employment climbed by 406,000 and the labor force grew by 485,000. That pushed the share of people working or looking for work higher by 0.2 percentage point to 61.8%, the strongest reading since May.
The broader underemployment rate, which counts discouraged workers and those stuck in part-time roles for economic reasons, fell to 7.6% - the lowest reading since January 2025. Policymakers often focus more on the unemployment rate than the payroll headline.
Wage pressures cooled further. Average hourly earnings rose 0.1% on the month and 3% over the past year, the smallest 12-month increase since May 2021. Wall Street had expected 0.3% and 3.1%. The average workweek held at 34.6 hours.
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Hiring gains were concentrated in a few corners: healthcare added 17,000 jobs, construction increased by 11,000, and manufacturing rose by 9,000. Cuts were broad elsewhere, with government payrolls down 17,000, temporary help services off by 11,000, information services lower by 10,000 amid concern about how artificial intelligence could affect jobs, and financial activities down by 7,000. Recent data still points to a low-hire, low-fire backdrop, with weekly jobless claims subdued and one measure showing layoffs at a four-year low.
Fed reaction, market moves, and what traders priced
Investors treated the weak hiring as another reason for the Federal Reserve to wait. Stock futures jumped and Treasury yields slipped after the report, reversing some of a recent climb that had taken yields back to territory last seen in the early 2000s. Market-implied odds of no move at the Oct. 27-28 meeting rose to 82.8% on CME Group's FedWatch.
Officials have been weighing how much longer to push rates higher. After recent remarks from policymakers, markets have largely shifted to expecting the next rate increase in December. The Federal Open Market Committee lifted its benchmark rate by a quarter point in September, and officials currently view inflation as the bigger risk to overall growth compared with the jobs backdrop.
Jefferies' chief U.S. economist, Thomas Simons, wrote, "For the Fed, this number should be the nail in the coffin for an October hike." He added, "The payroll data surged in August, and we had expected the momentum to continue this month, given the historically low prints on jobless claims in recent weeks." He continued, "However, it now appears that the August number was nothing more than a rebound from very weak hiring in June and July."
Growth backdrop and what it means for your money
The broader economy has held up. The Commerce Department this week lifted estimates for first-quarter GDP to 2.5% and second-quarter GDP to 2.2%, while the Atlanta Fed's tracker puts third-quarter growth at 3.7%. Inflation remains above the Fed's 2% goal, with the central bank's preferred core gauge running at a 3% annual pace.
Navy Federal Credit Union's chief economist, Heather Long, said, "Americans are frustrated by the lack of opportunities right now," adding, "Wage growth fell to a new 5-year low and is being wiped out entirely by inflation. That stings heading into the holidays." She called the labor backdrop "stable" and said she does not expect the Fed to abandon a December hike.
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