U.S. job growth slowed sharply in September, adding just 29,000 nonfarm payrolls as the labor market lost momentum heading into the final quarter of 2026.
The Bureau of Labor Statistics said the unemployment rate was little changed at 4.2%. The payroll increase was well below the 90,000 gain expected by economists surveyed by Reuters and followed a downwardly revised 133,000 increase in August.
Hiring weakened across major industries
The BLS said employment changed little across most major industries. Health care continued to add jobs, with employment up by 17,000, but even that was below the sector’s average monthly gain over the previous year.
Average hourly earnings rose 0.1% in September to $37.81. Over the past 12 months, wages increased 3.0%, a pace that suggests wage pressure is cooling compared with earlier periods of the post-pandemic expansion.
Earlier months were revised lower
The report also contained weaker revisions. July payrolls were revised down to a loss of 10,000 jobs from a previously reported gain of 21,000, while August was revised to 133,000 from 162,000. Combined, July and August employment was 60,000 lower than previously reported.
The softer numbers immediately affected financial markets. Treasury yields fell and U.S. stock futures rose as traders reduced expectations that the Federal Reserve would raise interest rates again at its October meeting.
The labor market is not showing broad-based layoffs, but the September data indicate that hiring has slowed substantially. For the Fed, the key question is whether weaker job creation is enough to offset inflation concerns that intensified after energy prices and bond yields rose in recent weeks.
Sources: U.S. Bureau of Labor Statistics Employment Situation, Oct. 2, 2026; Reuters global markets coverage.
