US Economy Added Just 29,000 Jobs in September, Well Below Forecast

US employers added only 29,000 nonfarm payrolls in September, the Bureau of Labor Statistics reported on Oct. 2 — less than a third of forecasts that ranged from roughly 84,000 to 90,000. The unemployment rate ticked up to 4.2% from 4.1%, and the agency revised its July and August estimates down by a combined 60,000 jobs.

The revisions matter as much as the headline. July now shows a loss of 10,000 positions, and August's gain shrinks to 133,000 from an initially reported 162,000. Payroll growth has averaged just 45,000 a month over the past year — a pace that barely covers population growth in the labor force.

What happened to paychecks?

Wage growth cooled alongside hiring. Average hourly earnings for private-sector workers rose 0.1% in September to $37.81, and were up 3% over 12 months. Both figures fell short of the 0.3% monthly and 3.2% annual gains economists had penciled in.

For an individual worker, the arithmetic is straightforward. A 3% annual raise against an inflation rate still above the Federal Reserve's 2% goal means real bargaining power is thinning — especially for job switchers, who typically need a tight labor market to command premium offers.

Which sectors are still hiring?

The sector detail was mixed:

• Health care, construction and manufacturing added jobs modestly
• Financial activities lost 7,000 positions
• The overall monthly average of 45,000 hires over the past year points to a labor market that has cooled sharply from post-pandemic norms

For candidates in health care, construction and manufacturing, openings remain real but scarce. Finance workers face outright contraction and should expect longer searches.

Why did markets rally on bad news?

Investors read the weak print as a reason for the Fed to hold off on further rate hikes. Before the release, fed funds futures implied only about a 23% chance of a quarter-point hike at the Oct. 27–28 policy meeting, down from more than 60% a week earlier.

Around 9:05 a.m. ET on Oct. 2, the SPDR S&P 500 ETF was up about 1% in premarket trading, the Invesco QQQ Trust gained nearly 1.5%, and the small-cap iShares Russell 2000 ETF climbed about 1.6%. The 10-year Treasury yield eased to roughly 5.17% from 5.24%, a day after hitting its highest level in about 24 years. Homebuilder and gold funds also moved higher.

Not every stock joined the rally: Nike slid about 8% before the bell after projecting a bigger fiscal-year sales drop than analysts expected, while Nvidia rose roughly 2%.

What does this mean for the Fed?

A weak jobs report strengthens the case for holding rates steady this month, but it does not settle the question. Inflation remains above the Fed's 2% target, and policymakers may still want more data before signaling a shift — a caution that cuts both ways for workers hoping rate relief will revive hiring.

The next checkpoint is already on the calendar: the October jobs report lands Nov. 6.