The U.S. economy added 29,000 jobs in September, missing analysts’ expectations significantly and pushing the unemployment rate up to 4.2 percent, according to data released by the Bureau of Labor Statistics on Friday. Stock futures rose sharply and Treasury yields slumped following the report, as investors interpreted the weak labor market data as a sign that the Federal Reserve will likely skip an interest rate hike at its October meeting.
September Job Gains Miss Expectations
The September job gains fell far short of the 84,000 additions anticipated by economists polled by Dow Jones Newswires and the Wall Street Journal. Adding to the soft data, the Bureau of Labor Statistics revised down job figures for July and August by a combined 60,000 jobs. The revision to July’s data showed the economy lost 10,000 jobs rather than posting a gain of 21,000, while August payrolls were adjusted down to 133,000.
Average hourly earnings for all employees rose 0.1 percent in September, bringing the 12-month gain to 3.0 percent, the lowest level since May 2021. With wage growth tracking below inflation for six straight months, most workers experienced real wage losses.
Sector Performance and Economic Pressures
Employment gains in September were largely driven by the healthcare sector, which added 17,000 jobs, though that pace remained slower than the average monthly gain of 33,000 over the prior year. Construction jobs increased by 11,000 due to ongoing data center build-outs, and manufacturing added 9,000 jobs.
Conversely, government employment fell by 17,000, temporary help services declined by 11,000, and information services lost 10,000 jobs amid concerns over artificial intelligence. Financial activities dropped by 7,000 jobs, extending a slump that has reached 129,000 positions since May 2025.
Political Repercussions Ahead of Midterms
The employment figures represent the final monthly jobs report issued before the November midterm elections, where President Donald Trump’s Republican Party faces a stern test over economic management. Democratic Senator Elizabeth Warren seized on the data to criticize Trump’s performance, while Trump’s top economic advisor Kevin Hassett stated he was “not even a little bit” disappointed in the figures.
The broader economic backdrop includes high borrowing costs, with 30-year fixed mortgage rates reaching 7.6 percent as global bond yields surged to levels not seen since 2002. President Trump traveled to Alabama to campaign on policy achievements and immigration, continuing a 32-day campaign blitz that includes stops in Ohio and Nebraska.
Federal Reserve Meeting on October Interest Rates
The Federal Reserve is scheduled to convene at the end of October to weigh its next monetary policy decision. Market-implied odds favor the central bank holding interest rates steady in light of the cooling labor market and disinflation in wages. The Bureau of Labor Statistics is scheduled to report September inflation numbers on October 14.
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