The US Bureau of Labor Statistics reported on Friday that nonfarm payrolls rose by just 29,000 in September 2026, falling well short of forecasts of 84,000 from economists surveyed by Dow Jones [Source: CNBC] and 90,000 in a separate Bloomberg survey of economists [Source: Bloomberg]. The September figure missed every estimate in the Bloomberg survey and came in below the 45,000 average monthly gain recorded over the prior 12 months. The unemployment rate rose to 4.2% from 4.1% in August, leaving 7.1 million people counted as unemployed.
The headline payroll number was compounded by downward revisions to prior months. The August 2026 gain was revised to 133,000 from an originally reported 162,000, while July 2026 was revised to a loss of 10,000 from a previously reported gain of 21,000. Combined, the two revisions reduced previously reported employment by 60,000 jobs. Average hourly earnings rose 0.1% month-on-month and 3.0% year-on-year in September, below consensus expectations of 0.3% and 3.2% respectively [Source: Trading Economics]. The labor force participation rate rose 0.2 percentage point to 61.8%, its highest since May, with household employment rising by 406,000 for the month while the labor force swelled by 485,000.
By sector, healthcare added 17,000 jobs, construction added 11,000, and manufacturing added 9,000 in September. Financial activities shed 7,000 jobs, continuing a decline that has cost the industry 129,000 positions since a May 2025 peak. The U-6 alternative unemployment measure, which includes discouraged workers and part-timers for economic reasons, edged down to 7.6%, its lowest since January 2025.
Markets responded swiftly to the data. The dollar fell to a session low after the release as traders trimmed bets that the Federal Reserve will raise interest rates this year. Stock-index futures, which had already moved higher ahead of the report as investors looked for clues on the Fed's policy path, extended gains after the figures crossed. Treasury yields retreated, with investors interpreting the data as a signal the Federal Reserve would hold rates steady at its October meeting. BlackRock portfolio manager Jeffrey Rosenberg characterised the September data as a 'dovish' report in televised remarks [Source: Bloomberg].
The soft September print follows what had been a notably strong August, when an originally reported gain of 162,000 — far above expectations of 53,000 at the time — was the strongest monthly payroll gain since March. The Federal Reserve raised its benchmark interest rate at its September 2026 meeting, its first hike in three years, having operated against a backdrop that prior data had characterised as a low-hire, low-fire economy, with weekly jobless claims low and one indicator showing layoffs at their lowest rate in four years. Fed officials more closely watch the unemployment rate than the headline payrolls number, a consideration that may give added weight to the tick up to 4.2% in September.
Sources: CNBC, Bloomberg, Yahoo Finance, Trading Economics