U.S. nonfarm payrolls rose a seasonally adjusted 29,000 in September, well short of the 84,000 economists surveyed by Dow Jones had expected, while the unemployment rate increased to 4.2%, the Bureau of Labor Statistics reported Friday.
The report also included downward revisions to prior months: August job gains were revised lower to 133,000, while July switched from a reported gain to a loss of 10,000 payrolls. In total, the revisions showed 60,000 fewer jobs than previously reported.
Markets reacted quickly to the weaker-than-expected data. Stock futures rose sharply after the release, and Treasury yields fell after recently climbing to levels not seen since the early part of the century. Market-implied odds that the Federal Reserve will hold rates steady at its Oct. 27-28 meeting jumped to 83.7%.
"For the Fed, this number should be the nail in the coffin for an October hike," said Thomas Simons, chief U.S. economist at Jefferies, adding that the strong August print now appears to have been "nothing more than a rebound from very weak hiring in June and July."
Household Survey Shows Different Picture
The household survey, used to calculate the unemployment rate, painted a stronger picture than the establishment survey behind the payrolls figure. Household employment rose by 406,000, the labor force grew by 485,000, and the participation rate increased 0.2 percentage point to 61.8%, its highest since May. An alternative measure of unemployment that includes discouraged workers and those in part-time jobs for economic reasons edged down to 7.6%, its lowest since January 2025.
