US adds just 29,000 jobs in September as unemployment hits 4.2%

US employers added only 29,000 jobs in September and the unemployment rate edged up to 4.2%, a cooling in the labor market captured in the last monthly payrolls report before the 3 November midterm elections, Theguardian reported.

The figure was under half the roughly 70,000 jobs economists had expected, according to Theguardian. The Bureau of Labor Statistics data showed hiring concentrated in a single industry, with healthcare adding 17,000 positions while information, financial and professional services shed workers.

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Key facts

• Nonfarm payrolls rose a seasonally adjusted 29,000 in September, and the unemployment rate rose to 4.2%, the Bureau of Labor Statistics reported.
• July and August payrolls were revised down by a combined 60,000 jobs; July flipped from a gain to a loss of 10,000 jobs, while August’s count fell to 133,000.
• Average hourly earnings rose 0.1% for the month, putting the 12-month gain at 3%, the lowest since May 2021.
• Market-implied odds that the Federal Reserve holds rates steady at its 27-28 October meeting jumped to 82.8%, according to the CME Group’s FedWatch tool, as reported by Cnbc.
• Unemployment among Black Americans rose a full percentage point to 7%, double the rate for white Americans.

Fed expectations shift toward December

The September release cooled expectations that the Federal Reserve would raise rates again at its final meeting before the midterms. The Fed lifted benchmark rates a quarter percentage point in September, its first increase in three years, with chair Kevin Warsh saying the labor market was “basically running consistent with full employment” while inflation was “too high and has been for too long,” according to Theguardian.

Cnbc reported that Thomas Simons, chief US economist at Jefferies, described the payroll figure as the likely decisive factor against an October hike, adding that August’s print now looks like a rebound from weak hiring in June and July rather than the start of stronger momentum. Npr reported that the soft data still leaves investors expecting at least one more rate increase before the end of the year, with most central bank officials penciling in a move before December.

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The household survey was notably stronger than the establishment survey. Cnbc reported that household employment rose 406,000 for the month, the labor force swelled by 485,000, and the participation rate rose 0.2 percentage point to 61.8%, its highest since May. An alternative unemployment measure that includes discouraged workers and people in part-time jobs for economic reasons edged down to 7.6%, its lowest since January 2025.

Why it matters

The report lands on the doorstep of an election in which prices remain the central economic grievance for households. Theguardian reported that mortgage rates climbed from 7% to 7.28% on Thursday, the largest weekly jump since 2022, and that higher oil prices have cost Americans an estimated $936 per household. With wage growth at a five-year low, workers’ buying power is being squeezed on both sides.

The picture is not uniform. Npr quoted Sarah House, senior economist at Wells Fargo, saying the good news is that layoffs are not widespread, but that the lack of churn makes it hard for people who lose a job, or who are new to the labor force, to get a foot in the door. Npr also quoted Heather Long, chief economist at Navy Federal Credit Union, saying wage growth at a new five-year low is being wiped out entirely by inflation, though she described the labor market as stable.

What to watch

The Federal Open Market Committee meets on 27-28 October, two days before the midterms, with December now the more likely window for the next hike if inflation remains above the Fed’s target. Economic growth data released during the week revised first- and second-quarter GDP to 2.5% and 2.2%, while the Atlanta Fed tracks third-quarter growth at 3.7%, per Cnbc.

This is not financial advice; interest-rate expectations, bond yields and equity prices can move sharply and unpredictably around central bank decisions.

Written by

Benjamin

Benjamin Carter covers business, finance, and the stock market for StockPil, focusing on the trends and data that matter to everyday investors.

Sources: The Guardian, Cnbc, Npr