Economists were hoping for a much stronger showing in September, but the U.S. economy created just 29,000 jobs, according to the report by the Bureau of Labor Statistics released Friday, Oct. 2. The unemployment rate came up to 4.2% from 4.1% in August. The jobs data was released just prior to the Nov. 3 midterm elections.
Report falls well short of forecasts
Wall Street had been hoping for a far more robust month. The analysts surveyed by Reuters had predicted about 90,000 new jobs, while Dow Jones had predicted 84,000. Job growth also ticked downward from August, when companies had added a revised 133,000 positions.
Some of the increase in unemployment was driven by an increase in the number of people moving into and/or back into the labor force. The labor force participation rate increased in September. The unemployment rate has remained steady at 4.1% to 4.3% since March. This rate increased for Black workers to 7.0%.
Healthcare carries the month
Most of the net gain was in healthcare and social assistance (+23,000). This is also far behind the industry’s rate of 57,000 jobs per month last year. There was growth in construction and hospitality too.
Manufacturing grew by 9,000 jobs, continuing a four-month streak of job gains in the sector. Meanwhile, government lost 17,000 posiitions. Information, business services and finance also suffered losses in jobs.
Wages trail inflation for a sixth month
Average hourly earnings increased by only 0.1 percent from August and 3 percent from a year ago. September was the sixth consecutive month of wage increase that has fallen short of the inflation rate, which means that many workers are losing purchasing power.
Kyle Moore, chief economist at The Century Foundation, said the labor market is slowing down, real wages are dropping and workers have little leverage.
A weak year for job growth
The U.S. gained 612,000 jobs, an average of about 68,000 per month, from January through September. The only years that were slower than 2026 over the past 20 years were 2010 and 2025, while 2008, 2009 and 2020 experienced job losses in the country.
The report also reduced the numbers in July and August by 60,000 jobs. Other information was mixed. The private payroll report from ADP showed 90,000 private-sector jobs added in September, while another report indicated that employers announced more than 43,000 job cuts, a decrease of 18% from the previous month.
What it means for the midterms and the Fed
The report comes just in time before voters vote. The Federal Reserve doesn’t anticipate that the soft numbers will lead to a rate change in October. The central bank’s focus remains on inflation, and analysts believe that it will remain on hold.
