Key Points
- 01U.S. nonfarm payrolls rose by 29,000 in September 2026
- 02Unemployment rate increased to 4.2% as hiring slowed
- 03July and August payrolls were revised down by a combined 60,000
- 04Markets trimmed expectations for an October Fed rate hike
September jobs report shows sharp hiring slowdown
U.S. nonfarm payrolls increased by 29,000 in September 2026, a gain that was well below the forecast of 84,000. The Bureau of Labor Statistics described both total nonfarm employment and the unemployment rate as changing little over the month, yet the latest figures signaled a noticeable cooling compared with recent expectations.
The unemployment rate rose to 4.2% in September, underscoring softer labor demand. Employment in all major industries changed little during the month, suggesting that the slowdown was broad-based rather than driven by a single sector.
Downward revisions weaken recent job gains
The September release also included sizable downward revisions to earlier data. July’s change in total nonfarm payroll employment was revised down by 31,000, shifting from a previously reported gain of 21,000 to a loss of 10,000 jobs.
August payroll growth was revised down by 29,000, to an increase of 133,000 from an initially reported 162,000. Taken together, these revisions left employment in July and August a combined 60,000 lower than previously estimated, softening the picture of recent labor-market momentum.
Wage growth edges higher but remains moderate
Average hourly earnings for all employees on private nonfarm payrolls edged up in September. Wages rose by $0.05, or 0.1%, to $37.81.
Over the past 12 months, average hourly earnings increased by 3.0%. The modest monthly gain, coupled with steady year-on-year growth, points to a labor market where wage pressures have not accelerated despite earlier tight conditions.
Market implications for Federal Reserve policy
Financial markets reacted quickly to the softer-than-expected jobs data and the downward revisions to prior months. Traders interpreted the report as reducing the probability of an interest rate increase at the Federal Reserve’s meeting later in October.
Market pricing in foreign exchange and bond markets shifted on the release as participants reassessed the near-term path of monetary policy. Some economists characterized the September outcome as making an October rate hike unlikely, as the weaker labor figures added to arguments for the Fed to keep rates on hold.
Key Takeaways
- 01The September data depict a labor market that is still adding jobs but at a slower pace than anticipated, reinforcing a picture of gradual cooling.
- 02Downward revisions to July and August reduce the strength of the recent hiring trend, which may weigh on confidence in the durability of job growth.
- 03Moderate wage gains, combined with softer payroll numbers, lessen immediate pressure for tighter monetary policy and support expectations for steady Fed rates in October.