September Jobs Report Falls Far Short: 29,000 Added, Unemployment Up to 4.2%

The American economy added 29,000 jobs in September, the Bureau of Labor Statistics said Friday morning. Economists had expected about 84,000, according to a Dow Jones survey. It was the third-weakest jobs report of 2026.

The unemployment rate ticked up to 4.2% from 4.1% the month before. Economists had expected it to hold steady. It was the first increase since February.

The summer months came in weaker than first reported. August was revised down from 162,000 jobs to 133,000. July now shows a loss of 10,000 jobs, down from an initially reported gain of 21,000. The two revisions took a combined 60,000 jobs off the summer totals.

Health care drove what hiring there was, adding 17,000 jobs. Construction added 11,000. Manufacturing added 9,000. Financial services went the other way, shedding 7,000 jobs — it is now down 129,000 from its recent peak in May 2025.

Pay is still struggling to keep up with prices. Average hourly earnings rose 5 cents to $37.81, up 3% over the year. Wages did not keep pace with inflation in July or August; September’s inflation number arrives Oct. 14. The labor force participation rate rose to 61.8% from 61.6%.

Few hires, few fires

The market remains stuck in its low-hire, low-fire pattern. Layoffs have stayed limited, but businesses are not bringing on new workers either. ADP’s private-sector report, released Wednesday, counted 90,000 private jobs in September — far higher than the government’s number.

Workers are feeling it. Glassdoor’s employee confidence index fell to a new record low in September. “This is not a labor market that people find favorable, especially in the face of higher costs,” Kory Kantenga, LinkedIn’s head of economics for the Americas, told USA Today. “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.”

Employers announced plans to hire 90,787 workers in September, according to an Oct. 1 report from Challenger, Gray & Christmas. That was a big jump from August’s 12,325, but it was down 23% from a year ago — the lowest September total since 2011. The same report found 43,281 announced layoffs, the lowest September total since 2022.

What it means for the Fed

The Federal Open Market Committee meets Oct. 28. In September it voted to raise its benchmark short-term rate, trying to bring inflation back under its 2% target after five years above it. Chair Kevin Warsh has called the labor market “stable.”

The weak report takes some pressure off. Before the release, 76% of traders expected the Fed to hold rates steady this month; afterward, 82% did, according to CME FedWatch. Most still expect a second quarter-point hike in December.

“For the Fed, the mediocre September jobs report wasn’t weak enough to shift their focus away from inflation,” Bill Adams, chief U.S. economist at Fifth Third Commercial Bank, wrote in a note Friday. “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.”

The 10-year Treasury yield fell to 5.18% on Friday morning, down from 5.24% a day earlier. It had touched 5.35% on Thursday, its highest close in 24 years.