U.S. Job Growth Slows Sharply in September With Unemployment Climbing to 4.2%

U.S. nonfarm payroll employment grew by only 29,000 in September, falling significantly below the 90,000 forecast, while the unemployment rate rose to 4.2% from 4.1% in August. Previous months saw substantial downward revisions, with July employment actually declining by 10,000 and August revised down to 133,000 from 162,000, reducing combined growth for the two months by 60,000 positions. Health care was among the few sectors showing employment gains, though at a slower pace than its recent average, indicating broader labor market weakening.

September's employment figures reveal a significant slowdown in labor market expansion. The addition of merely 29,000 jobs trailed expectations by more than two-thirds, while revisions to prior months painted an even bleaker picture—July showed an outright contraction rather than growth. The cumulative effect of these adjustments erased approximately 60,000 positions from the previously reported totals, suggesting initial data overstated the economy's hiring capacity.

Health care emerged as one of the few bright spots, though even this traditionally resilient sector demonstrated deceleration. At 17,000 positions added, health care gains fell substantially short of their 12-month average of 33,000 monthly hires. This broad-based weakness across industries points to structural labor market tightening rather than localized sectoral weakness.