September Jobs Miss Deepens as Payrolls Add Just 29,000; Unemployment Rises to 4.2%

**Payrolls Disappoint; Unemployment Edges Higher**

The U.S. labor market delivered a major miss in September, with nonfarm payrolls rising by just 29,000, the Labor Department reported Friday. Economists had forecast a gain of 90,000 jobs. The unemployment rate rose to 4.2% from 4.1%, as the number of unemployed workers increased to 7.1 million.

The report also included significant downward revisions. Combined payroll gains for July and August were trimmed by 60,000. August's figure was revised to 133,000 from an originally reported 162,000, and July's reading was revised from +21,000 to -10,000.

Average hourly earnings rose 0.1% for the month, below the 0.3% consensus estimate, pulling the annual pace of wage growth to 3.0% — the smallest gain since May 2021.

**Broader Economic Picture Weakens**

The jobs report is the final major economic snapshot ahead of next month's midterm elections and comes as public confidence in the economy has eroded sharply. The Conference Board's consumer confidence index fell 6.7 points to 81.9 in September, the lowest reading since April 2014. Write-in responses cited persistent high costs for gas, goods and services.

Other data released in the past week painted a mixed picture. The average rate on a 30-year fixed mortgage rose to 7.28%, the highest in nearly three years. Job openings slid to 7.08 million in August from a revised 7.34 million, below forecasts. Inflation, as measured by the Commerce Department's personal consumption expenditures index, cooled to 3.4% year-over-year in August, below the 3.7% expected. Excluding food and energy, core prices rose 3%.

The economy grew at a 2.2% annualized pace in the second quarter, supported by consumer spending that rose at a 3.8% annual rate.

**Market Reaction: Bonds Surge, Stocks Rebound**

Treasury yields fell sharply after the weak payrolls data, with the 10-year note dropping as low as 5.16% from 5.22% before the release. The move squeezed heavily short-positioned bond traders.

U.S. stocks reversed earlier losses and climbed toward record levels, with the S&P 500 and Nasdaq 100 both rising. The rally was supported by a concurrent drop in oil prices, which fell 3.8%, easing inflation concerns. In premarket trading, all major technology stocks were higher, led by Nvidia which gained 1.7%.

**Sector and Demographic Detail**

Hiring was concentrated in a few industries. Health care added 17,000 jobs, though that was below the average monthly gain of 33,000 over the prior year. Construction added 11,000 and manufacturing was little changed with a gain of 9,000. Employment in financial activities fell by 7,000, reflecting a broader decline in that sector.

The unemployment rate for Black workers jumped to 7.0% in September, according to the data. Rates for other major groups showed little change: adult men 3.9%, adult women 3.6%, whites 3.6%, Asians 2.9%, and Hispanics 4.7%.

The number of long-term unemployed (27 weeks or more) was essentially unchanged at 1.9 million, accounting for 27.1% of all unemployed. Part-time employment for economic reasons held at 4.5 million.

**Consumer Resilience Tempered by Income Squeeze**

Despite the weak headline payroll number, consumer spending has held up better than many analysts expected. Real consumer spending rose 0.6% month-over-month in August, according to data cited by EY-Parthenon chief economist Gregory Daco. He estimated third-quarter consumption is tracking near 3.4% annualized and projected real GDP growth around 4.2% in the third quarter.

"The income squeeze from higher inflation remains visible with slower income growth and lower savings capping consumer spending capacity," Daco said in an analysis of personal income and spending data.

The personal saving rate was revised higher to 4.6% in July and 4.1% in August, though still below levels from earlier in the recovery.

**Political Context**

The September jobs report arrives just weeks before midterm elections, with surveys showing public disapproval of President Donald Trump's handling of the economy and cost of living at new lows, as reported by The Independent. Consumer confidence has fallen to levels not seen since 2014, a potential headwind for Republican candidates.

The combination of sluggish hiring, rising unemployment, and cooling wage growth is expected to reinforce the Federal Reserve's cautious stance. While some regional Fed officials have argued for further rate increases, the softer data — along with the downward revisions — gives the central bank room to pause.