September Jobs Miss Lifts Rate-Cut Bets; U.S. Adds 29,000 vs 90,000 Expected

U.S. employers added a mere 29,000 jobs in September, far below the 90,000 expected by economists, while the unemployment rate ticked up to 4.2% from 4.1%, the Labor Department reported Friday. The combined figures for July and August were revised down by 60,000 jobs.

The September miss — the weakest monthly gain in recent memory — immediately shifted market expectations toward easier Federal Reserve policy. The S&P 500 finished up 0.7% on the day, with 10 of 11 sectors in positive territory. Yields on U.S. Treasuries tumbled, with the 10-year note falling from 5.22% to 5.16%, a new weekly low, as traders piled into rate-cut bets.

"This report is lousy for the economy, but could keep the Fed from making trouble, and so the market was pretty good with it," said Chris Low of FHN Financial in a note reported by newswire.

The "bad news is good news" narrative appeared to resurface. "Today's report may revive the 'bad news is good news' narrative, but hoping for a weaker labor market just to secure easier financial conditions is a poor tradeoff," said Bret Kenwell of eToro.

**Headline Miss and Revisions**

The September print of 29,000 was below all estimates. August payrolls were revised down to +133,000 from the originally reported +162,000. July was slashed to -10,000 from a previously reported +21,000 — meaning the July figure fell back into negative territory.

The unemployment rate rose to 4.2% as the number of unemployed workers increased by 78,000 to 7.1 million. The labor force participation rate edged up to 61.8%, but the employment-population ratio was little changed at 59.2%.

Wage growth continued to cool. Average hourly earnings rose just 0.1% month-over-month, below the 0.3% gain expected, pushing the annual rate down to 3.0% — the lowest since May 2021. Average hourly earnings for production and nonsupervisory employees rose 7 cents to $32.60.

**Sector Highlights**

Health care continued to add jobs in September (+17,000) but at a slower pace than the average monthly gain of +33,000 over the prior 12 months. Ambulatory health care services added 13,000, while hospitals added 12,000; nursing and residential care facilities lost 9,000.

Construction employment was little changed (+11,000), in line with its 12-month average. Manufacturing added 9,000 jobs, increasing by 72,000 since a recent low in December 2025, with gains in plastics and rubber products (+5,000) and machinery (+5,000).

Financial activities shed 7,000 jobs, down 129,000 from a peak in May 2025, with most losses in insurance carriers and related activities (-90,000).

In retail, department stores cut 700 jobs, while apparel specialty stores added 600 positions.

The number of long-term unemployed (27 weeks or more) held steady at 1.9 million and accounted for 27.1% of all unemployed people. The number of people employed part-time for economic reasons was little changed at 4.5 million.

**Political and Energy Context**

The report is the final official economic snapshot before the Nov. 3 midterm elections, according to the Independent. Recent surveys show public approval of President Donald Trump's handling of the economy and living costs has fallen to new lows amid persistent inflation worries.

Separately, oil prices fell on Friday after G7 countries agreed to a coordinated emergency release of 100 million barrels of fuel reserves through the International Energy Agency, citing the U.S.-Iran conflict. U.S. benchmark crude finished down about 2% at $91.11 per barrel.

The weak jobs data reinforced the view that the Fed may hold steady or cut rates at its next meeting. "Today's report may keep the Fed from making trouble," Low said. Seeking Alpha reported that market odds of a Fed hold increased following the release.