United States nonfarm payrolls grew by just 29,000 in September while the unemployment rate ticked up to 4.2 percent, according to data released on Friday by the Bureau of Labor Statistics. The weaker-than-expected hiring figures and downward revisions to prior months triggered a rally in Wall Street futures and falling Treasury yields.
The US labor market slowed down more sharply than anticipated heading into the final quarter of the year. Economists surveyed by Dow Jones had projected an addition of 84,000 jobs, while a broader Reuters poll pointed toward 90,000 new positions. Instead, nonfarm payrolls increased by 29,000 in September, falling well short of forecasts and dragging down the broader economic outlook.
The headline job growth figure was further softened by substantial downward revisions to the preceding summer months. July payroll additions were slashed by 31,000, turning an originally reported 21,000 gain into a net loss of 10,000 jobs. August figures were similarly revised down by 29,000, moving from 162,000 down to 133,000. Taken together, the revisions erased 60,000 jobs from the previously published tallies, painting a picture of a cooling labor market long before autumn set in. Commenting on the conditions prior to the report, Joe Brusuelas, chief economist at RSM, noted that the country had reached full employment and that the data would not contain anything to force the Federal Reserve to alter its path regarding interest rates this year.
Sector-Specific Gains and Losses Across Industries
Healthcare continued to provide the bulk of new employment opportunities, adding 17,000 jobs in September, though that pace sits below its 12-month average of 33,000. Construction contributed 11,000 new positions, holding steady near its recent monthly average of 10,000, supported in part by ongoing data center construction tied to artificial intelligence infrastructure. Meanwhile, manufacturing added 9,000 jobs, bringing its total recovery to 72,000 since hitting a recent low in December 2025.
Not all sectors shared in the growth. Financial activities shed 7,000 jobs during the month. Since peaking in May 2025, the financial sector has lost 129,000 positions, with insurance carriers and related activities accounting for 90,000 of those reductions.
National Unemployment Rate Ticks up to 4.2 Percent
The national unemployment rate ticked up to 4.2 percent in September, remaining inside the tight 4.1 to 4.3 percent band it has occupied since March. The total number of unemployed individuals stood at 7.1 million, while the unemployment rate among Black workers rose to 7.0 percent during the month. The labor force participation rate held steady at 61.8 percent, and the employment-to-population ratio remained unchanged at 59.2 percent.
Other underlying measures showed persistence in long-term distress. Roughly 4.5 million Americans worked part-time for economic reasons because their hours had been cut or they could not secure full-time work. Long-term unemployed individuals—those without a job for 27 weeks or longer—remained at 1.9 million, making up 27.1 percent of all unemployed workers. Average hourly earnings for private nonfarm payroll employees increased by 5 cents, or 0.1 percent, to $37.81, reflecting a 3.0 percent rise over the preceding 12 months, while the average workweek held at 34.4 hours.
Wall Street Indices Open Higher on Cooling Labor Market
The softer-than-expected employment report immediately altered trading sentiment across financial markets. Major indices on Wall Street opened higher on Friday as investors bet that the cooling labor market would persuade the Federal Reserve to keep interest rates unchanged at its upcoming meeting. The Dow Jones Industrial Average climbed 340.08 points, or 0.67 percent, to 51,266.64. The S&P 500 advanced 68.27 points, or 0.89 percent, to 7,734.72, and the Nasdaq Composite added 341.47 points, or 1.27 percent, to reach 27,216.91. Futures markets showed similar strength, with Dow Jones futures advancing 298 points to 51,539, S&P 500 futures rising 0.48 percent to 7,761, and Nasdaq-100 futures gaining 0.63 percent to 30,955.
Treasury yields also reacted to the data, coming off highs that had rattled investors earlier in the week. The yield on the 10-year Treasury note hovered near 5.226 percent on Friday morning, stabilizing after touching 5.344 percent on Thursday—its highest level since 2002. Relief in the bond market was further supported by sinking oil prices, with Brent crude easing toward 99.94 dollars per barrel amid reports that the United Kingdom and European nations were considering drawing from strategic fuel reserves.
