U.S. Jobs Increase by 29,000 in September as Unemployment Rises to 4.2%
Key Facts
The U.S. economy added 29,000 nonfarm jobs in September, while the unemployment rate rose to 4.2% from 4.1% in August, according to a Bureau of Labor Statistics report released on October 2. The increase in jobs fell short of the 90,000 forecast by economists surveyed by Reuters. The bureau also lowered its estimate of August job growth to 133,000 from 162,000. It revised July’s reading from a gain of 21,000 jobs to a loss of 10,000. Together, the revisions cut previously reported jobs by 60,000, pointing to a weaker pace of hiring than the initial estimates had shown.
The Bureau of Labor Statistics said the average monthly increase in nonfarm jobs over the previous twelve months was 45,000, compared with September’s gain of 29,000. On an annual basis, the economy had added 254,000 jobs in September 2025. By sector, healthcare employment rose by 17,000 jobs, below the average monthly increase of 33,000 over the previous twelve months. Construction added 11,000 jobs, while manufacturing employment increased by 9,000. The bureau described changes in the latter two sectors as limited, while healthcare continued its upward trend at a slower pace.
On the unemployment front, the number of unemployed people increased by 78,000 between August and September, reaching 7.109 million. At the same time, the labor force participation rate rose to 61.8% from 61.6%, as the number of participants increased by 485,000. The figures show that unemployment rose alongside an influx of more people into the labor force. As for wages, average hourly earnings for private-sector nonfarm employees increased by 5 cents, or 0.1%, in September to $37.81. In the twelve months ending in September, average hourly earnings grew by 3.0%.
After the report was released, economists said seasonal adjustment factors, along with the timing of the Labor Day holiday, which fell late in the month, may have contributed to September’s weak reading and the revision to August. Reuters quoted them as saying that volatility related to seasonal adjustment factors may explain the modest figure and revision, without that alone constituting evidence of a sudden deterioration in the labor market. Initial jobless claims remained low in subsequent data: they totaled a seasonally adjusted 194,000 for the week ended October 17, down 6,000 from the previous week after revision. The four-week average of claims also fell to 197,750 for the week ended October 17. The Labor Department announced these figures on October 22; they measure the week ended October 17, not the announcement date itself.
In the October 2 session, the S&P 500 rose 0.7% and the Nasdaq Composite climbed 1.2%, while the dollar fell and bond yields rose after declining earlier. The yield on the 10-year U.S. Treasury temporarily fell below 5.17% before rebounding to 5.28% as stocks pared their gains. Bets on an October rate hike declined: the probability of a hike fell to less than 23% after the report, compared with 64% a week earlier, according to CME Group data cited by the Associated Press. In separate pricing cited in a Reuters report, the probability of rates remaining unchanged stood at about 80% after the data, versus 74% before. Adam Schickling, chief economist at Vanguard, said the report "strengthens the case for the Federal Reserve to be patient" and wait for more data.
Attention now turns to the Federal Open Market Committee meeting scheduled for October 27 and 28, with the press conference on October 28. The meeting follows weak jobs data that prompted traders to scale back bets on a rate hike, while the employment reading remains affected, according to the economists quoted by Reuters, by potential seasonal factors. The committee’s next meeting is scheduled for December 8 and 9. The Bureau of Labor Statistics is scheduled to release the October jobs report on November 6, 2026, at 8:30 a.m. Eastern Time. The October reading will be the next milestone in tracking trends in employment, unemployment and wages.