The US jobs report September 2026 showed a sharp slowdown in hiring, with employers adding just 29,000 jobs while the unemployment rate rose to 4.2%. The result came in far below the 90,000 jobs economists expected and reversed much of the optimism created by August’s stronger report.
The Bureau of Labor Statistics also revised the previous two months lower by a combined 60,000 jobs, including a revision that showed the economy lost 10,000 jobs in July. The weak payroll gain immediately reduced expectations for another Federal Reserve rate increase at its October meeting, even though inflation remains above the central bank’s 2% target.
US Jobs Report September 2026 Misses Forecasts
Nonfarm payrolls increased by 29,000 in September after August’s gain was revised down to 133,000 from 162,000. Reuters reported that economists had expected a 90,000 increase, making the actual result less than one-third of the consensus forecast.
The report also showed that job creation has slowed substantially on a three-month basis. Payroll gains averaged 51,000 per month over the past three months, a pace that is only slightly above some economists’ estimates of the number of jobs needed each month to keep up with population growth.
American News Brief previously reported that the August jobs report initially showed 162,000 new jobs and a 4.1% unemployment rate. The September release materially changed that picture by revising August lower and revealing another weak month of hiring.
Unemployment Rises as More People Enter Workforce
The unemployment rate increased to 4.2% from 4.1%, but the rise came as more Americans entered the labor force. Household employment increased by 406,000, while the labor force expanded by 485,000, lifting the labor-force participation rate to 61.8% from 61.6%.
That combination suggests the labor market is not experiencing a broad wave of layoffs. Initial unemployment claims have remained near multi-decade lows, and economists described the environment as a low-hire, low-fire labor market in which businesses are cautious about adding workers but are not cutting staff aggressively.
Still, some measures point to growing strain for people looking for work. Long-term unemployment increased, and the median duration of unemployment rose to 11.5 weeks, near its highest level in more than four years.
Healthcare and Construction Add Jobs
Healthcare remained the largest source of job creation, adding 17,000 positions in September, although that was well below the sector’s average monthly gain over the prior year. Construction added 11,000 jobs, while manufacturing increased by 9,000, gains that may reflect continued infrastructure and artificial-intelligence-related investment.
Leisure and hospitality added 10,000 positions, while wholesale trade, retail trade and transportation posted modest gains. Those increases were offset by losses in information, financial activities, professional and business services, mining and logging, and government.
Government employment fell by 17,000, driven mainly by local government outside education. The share of industries reporting job growth also declined to 49%, an 11-month low that suggests hiring weakness has broadened even without a corresponding surge in layoffs.
Wage Growth Slows and Fed Rate Bets Fall
Average hourly earnings rose just 0.1% in September after increasing 0.3% in August, bringing annual wage growth down to 3.0% from 3.1%. Slower wage growth reduces the risk that labor costs will add significantly to inflation, but it can also weaken consumer spending if pay gains continue to lag price increases.
Financial markets quickly reduced expectations for another Federal Reserve rate increase in October after the report. Traders initially pushed the probability of an October hike down to roughly 13% before it recovered to about 23%, according to market pricing cited by Reuters.
The Fed raised its benchmark rate by a quarter percentage point in September to a target range of 3.75% to 4.00%. American News Brief also reported that the September increase was the Fed’s first rate hike in three years, with policymakers signaling that additional tightening could still be necessary if inflation remains too high.
What the September Report Means for the Economy
The weak payroll number does not by itself establish that the U.S. economy is entering a downturn. Economists noted that September payrolls can be unusually volatile when Labor Day falls relatively late in the month, and other indicators such as unemployment claims continue to show that employers are reluctant to lay off workers.
Even so, the report gives policymakers and investors a more cautious view of the labor market than they had after August. Hiring has slowed, wage growth has eased and previous payroll estimates were revised down, leaving less margin for error if energy prices, tariffs or tighter financial conditions begin to weigh more heavily on businesses.
The next major questions are whether job creation rebounds in October and whether inflation data give the Fed room to pause. If hiring remains weak while inflation continues to cool, the case for skipping an October rate increase would strengthen, while a renewed inflation surge could force policymakers to choose between supporting employment and restraining prices.
