US Payrolls Grew Just 29,000 in September, Far Below Forecasts

US private payrolls grew by only 29,000 in September, according to the Bureau of Labor Statistics — less than half the 84,000 gain economists surveyed by Dow Jones had forecast. The unemployment rate also climbed, confounding expectations that it would hold at 4.1%.

The headline number was not the report's only problem. August's payroll figure was revised down to 133,000, and July's was revised from a gain to a loss of 10,000. Taken together, the revisions removed 60,000 jobs from the prior two months' totals, meaning September's labor market was weaker than the initial release alone suggests.

Where the jobs are — and aren't

Sector detail matters for anyone reading this report for career signals. Health care, construction, and manufacturing led the gains in September, while financial activities posted losses. For job seekers, that split points to where hiring demand is still concentrated: clinical roles, skilled trades, and factory work are absorbing workers even as white-collar hiring in finance contracts.

The bigger pattern is volatility. Payroll growth has swung sharply through much of this year, even as the unemployment rate has moved relatively little. That combination — a stable jobless rate alongside erratic monthly payroll prints and downward revisions — typically signals a market where employers have stopped adding headcount aggressively but have not yet begun broad layoffs. In practical terms, incumbents keep their jobs while new entrants and switchers face a thinner set of openings.

Markets respond: rate-hike odds collapse

Futures markets reacted quickly. The probability that the Federal Reserve keeps rates unchanged at its next meeting climbed to 86.2% on Friday, up from 75.6% on Thursday and 64.2% on Wednesday, according to the CME Group's FedWatch tool. Odds of a hike had already fallen earlier in the week after the Fed's preferred inflation gauge came in well below expectations.

Commerce Department data showed the personal consumption expenditures price index rose a seasonally adjusted 0.3% for the month, with the 12-month gain at 3.4% — below the 3.7% economists expected. The core index increased just 0.2% against a 0.3% forecast, and its annual reading of 3% undershot the 3.3% consensus. Energy costs led the monthly increase: gasoline jumped 4.4%, transportation services gained 1.4%, and energy goods and services rose 2.3%.

Not everyone at the Fed is convinced the inflation fight is over. Minneapolis Fed President Neel Kashkari, speaking at a Council on Foreign Relations event in New York, said: "There are many different measures of inflation, but it's running at around a 3% rate."

"It's been elevated now for more than five years. I didn't think the inflation data today really changed that story for me very much." He added that other data released the same day, including an updated GDP report and private payrolls figures, showed the US economy remains "resilient."

The economy underneath the labor market

The Bureau of Economic Analysis revised second-quarter GDP up to 2.2% growth from its previous estimate of 1.5%, though that still trails the first quarter's 2.5%. "Real GDP was revised up 0.7 percentage point from the second estimate, primarily reflecting upward revisions to investment, consumer spending, and government spending," the report said.

Consumer spending — roughly 70% of US economic activity — climbed 3.8% in the second quarter, up sharply from 0.7% in the first. That strength helps explain why hiring has slowed without tipping into outright contraction: demand remains solid, but firms are meeting it with productivity and existing staff rather than new payroll additions.

For workers, the September report narrows the realistic picture of leverage. Candidates in health care, construction, and manufacturing retain bargaining power; those targeting financial services face a shrinking pool of roles. With markets now overwhelmingly expecting the Fed to stand pat, the interest-rate relief that often accompanies rate cuts — and the hiring pickup it can trigger — looks further away than it did a week ago. The next jobs report and any further payroll revisions will show whether September was an outlier or the start of a trend.