US Added 29,000 Jobs in September — Below Trend, Not Weak

The US economy added 29,000 payrolls in September — a headline that missed market expectations, yet sits comfortably above RBC Economics' breakeven estimate of 20,000 jobs per month needed to keep the labor market stable. In RBC's reading, the shortfall says more about retirements than layoffs, and the underlying data still points to a tight US labor market rather than a weakening one.

Economists Mike Reid, Carrie Freestone and Imri Haggin, who authored the RBC analysis, argue the softer top-line number obscures sturdy foundations. Payroll gains were broad-based across sectors. Declines clustered in industries with older workforces, where retirements — not dismissals — are the more likely explanation. Financial services illustrates the point: the median worker age there is 44.2 years, versus 42.1 years across the economy as a whole. Meanwhile, the goods sector continued to recover from the post–"Liberation Day" layoffs recorded earlier in 2025, offsetting a slowdown in health care hiring.

The unemployment rate ticked up to 4.2%, but RBC characterizes the move as largely a rounding artifact: the unrounded figure was 4.175% in September against 4.141% in August. A jump in labor force participation to 61.8% drove the marginal rise — a sign of more people entering the workforce, not of deteriorating demand. Every measure of unemployment outside the headline U-3 held steady or improved.

What the slack indicators show

For job seekers, the more consequential question is whether demand for labor is eroding beneath the headline numbers. On RBC's dashboard of persistent-tightness indicators, it is not:

• Aggregate hours in the private sector are accelerating, meaning more workers are working more hours.
• Part-time workers for economic reasons, as a share of total employment, sit near an all-time low — a signal of minimal slack.
• The job-finding rate ticked higher, and broader measures of slack improved across the board.

Taken together, those indicators suggest an individual's bargaining position in the market remains firmer than the payroll headline implies. Workers are finding jobs at a slightly better rate, and employers are drawing more hours from existing staff rather than cutting them.

Wage data: read the paycheck, not the hourly print

Average hourly earnings rose just 0.1% month over month in September — a reading RBC cautions against overinterpreting. The hourly series is subject to noise from compositional effects, driven by which sectors are hiring and the demographics of who is working. The firmer signal sits in weekly pay: because hours worked are rising, real average weekly earnings declined in only one month this year, in May, even though real average hourly earnings have spent 2025 in negative territory.

That pattern aligns with this week's notable upward revisions to personal spending and the saving rate. Workers are, in aggregate, taking home more money every week even as the hourly wage print looks soft.

The real risk is inflation, not hiring

RBC's bottom line for households and job seekers: the labor market backdrop is not the vulnerability in the US economy. The challenge the firm flags is an inflation pipeline that is heating up — a dynamic that hits paychecks through prices rather than through job losses. With slack measures near historic lows and weekly earnings trending up in real terms for most of the year, RBC's analysis suggests September's weak headline is a rounding-level wobble in a labor market that remains tight, and the firmer indicators — hours, job-finding, participation — will be the ones to watch as October data arrives.