US economy adds just 29,000 jobs in September as unemployment rises to 4.2%

US employers added only 29,000 jobs in September, far below economists' expectations of about 90,000, while the unemployment rate ticked up to 4.2% from 4.1% in August, according to the Bureau of Labor Statistics. The report, released Friday, is the final official employment snapshot before the November 3 midterm elections.

The gain marked a sharp slowdown from August's revised 133,000 jobs, and the Labor Department also revised July from an initial gain of 21,000 to a loss of 10,000 jobs. Combined revisions for July and August lowered previously reported payrolls by 60,000.

Healthcare and social assistance led hiring with 23,000 jobs added, though that was below the sector's recent average. Construction added 11,000 jobs, and manufacturing added 9,000. But government shed 17,000 jobs, professional and business services lost 9,000, and financial activities lost 7,000.

Average hourly earnings grew 3% from a year earlier, the slowest pace since May 2021 and the fourth consecutive monthly slowdown. The labor force participation rate rose, as 485,000 people entered the workforce and not all found jobs immediately.

The weak report reduced expectations that the Federal Reserve will raise interest rates at its meeting later this month. CME FedWatch put the probability of holding rates steady at 77.3%, up from 35.8% a week earlier. Stocks rose and Treasury yields fell after the data.

The numbers stand in sharp contrast to President Donald Trump's claims that the economy is booming. An AP-NORC poll released Thursday found only 17% of Americans approve of his handling of cost-of-living issues and 26% approve of his handling of the economy overall, both new lows.

“Today's disappointing report shows the labour market is grinding to a halt, marked by slow hiring and declining real wages that leave workers with very little leverage.”

: Kyle Moore, chief economist at The Century Foundation

Economists described a 'low-hire, low-fire' labor market in which layoffs remain low but job seekers struggle. The unemployment rate for Black Americans rose a full percentage point to 7%, double the rate for white Americans.

Bradley Saunders, North America economist at Capital Economics, called the figure 'not disastrous,' noting that a drop in government roles and temporary visa policy changes weighed on growth. George Brown, senior economist at Schroders, said a single soft report is unlikely to signal a lasting collapse.

The report follows other cooling signals, including a drop in consumer confidence to the lowest level in more than a decade and a Glassdoor employee confidence index at a record low. The economy has added an average of 68,000 jobs per month this year, better than 2025's 9,700 average but well below pre-pandemic norms.