US labor market stumbles in September with just 29,000 jobs added and unemployment rising to 4.2%

The US economy added far fewer jobs than expected in September, signaling a sudden weakness in the labor market and the broader economy.

The US Bureau of Labor Statistics reported on Friday that seasonally adjusted nonfarm payrolls increased by 29,000 during the month, while the unemployment rate rose to 4.2%. Economists surveyed by Dow Jones had expected payrolls to increase by 84,000 and the unemployment rate to come in at 4.1%.

In addition to September’s weakness, August payroll figures were revised lower to show a gain of 133,000 jobs, while July’s figure was revised from an increase to a decline, with nonfarm payrolls falling by 10,000. Overall, the revisions showed 60,000 fewer jobs were added than previously reported.

Markets reacted quickly to the report, with traders viewing the weak employment figures positively as they could further strengthen expectations that the Federal Reserve will leave interest rates unchanged at its October meeting. Stock futures jumped following the data, while US Treasury yields fell after recently climbing to levels not seen since the early 2000s.

Federal Reserve officials are closely monitoring the unemployment rate, even more so than the headline nonfarm payrolls figure.

The household survey, which is used to calculate the unemployment rate, was slightly stronger than the establishment survey, from which the nonfarm payrolls figure is derived.

Employment according to the household survey increased by 78,000 during the month, while the labor force expanded by 485,000. The labor force participation rate, which measures the share of people who are either employed or actively looking for work, rose by 0.2 percentage points to 61.8%, its highest level since May.

A broader measure of unemployment edged down to 7.6%. This measure includes discouraged workers who have stopped looking for work as well as people working part-time for economic reasons, bringing it to its lowest level since January 2025.