- Miss. Nonfarm payrolls grew by just 29,000 in September, less than a third of the 84,000 consensus and well below the 12-month average of 45,000 monthly gains that itself already reflected a slowing labour market.
- Fact. Unemployment ticked up to 4.2% from 4.1%, covering 7.1 million workers, while prior-month revisions erased a combined 60,000 jobs from July and August, according to the Bureau of Labor Statistics release.
- Stake. Fed funds futures now price roughly 72% odds that the Federal Reserve holds rates steady at its October 28 meeting, compared with roughly 34% before the report.
The September employment situation report, released on October 2, delivered the weakest headline payroll print since the labour market began losing momentum earlier in 2026. Nonfarm payrolls rose by 29,000, against a Wall Street consensus of 84,000 and far below August’s revised figure of 133,000 — itself downgraded from the initially reported 162,000. The unemployment rate rose to 4.2%, reflecting an influx of job-seekers into the labour force as well as an absolute increase in the number of unemployed.
The reading adds further strain to a data picture that the ADP private employment survey had suggested might hold firm entering the fall, but which the official BLS figures now contradict sharply.
Sector Breakdown and Revisions
Health care led all sectors with 17,000 additions, though that pace was below its 12-month average of 33,000. Construction contributed 11,000, roughly in line with recent monthly averages, while manufacturing added 9,000 — continuing a recovery from a December 2025 trough. Financial activities subtracted 7,000 jobs and has shed 129,000 positions since May 2025, a drag that reflects both tighter credit conditions and ongoing consolidation in banking.
Revisions deepened the picture: July’s print was cut from a gain of 21,000 to a loss of 10,000, and August was revised down from 162,000 to 133,000. The combined downward revision of 60,000 means the three-month moving average through September now sits well below levels the Federal Reserve has described as consistent with trend employment.
Wages and the Fed
Average hourly earnings for private nonfarm payroll employees rose five cents, or 0.1%, to $37.81 in September. On a 12-month basis wages are up 3.0% — a reading that, taken with the soft headline, gives the Federal Reserve limited justification for another rate increase at its October 28 meeting. The Fed raised rates in September to a range of 3.75%–4.00%, and market pricing immediately after the report put roughly 72% odds on an October hold, up sharply from pre-release estimates. The 10-year Treasury yield slid roughly five basis points to around 5.18% following the release.