Key facts
- US nonfarm payroll jobs increased by 29,000 in September.
- Previous two months' job growth data was revised down by 60,000.
- The US unemployment rate rose to 4.2% in September.
- Wage growth slowed to 3.1%, the slowest in five years.
- Healthcare, manufacturing, and construction sectors saw notable job gains.
- Residential specialty trade contractors lost 7,900 jobs in September.
US job growth slowed considerably in September, with nonfarm payrolls increasing by just 29,000, according to data from the U.S. Bureau of Labor Statistics. This figure was accompanied by a downward revision of 60,000 jobs for the prior two months. The unemployment rate ticked up to 4.2%, with 7.1 million people unemployed, a rate that has remained between 4.1% and 4.3% since March.
Lawrence Yun, chief economist at the National Association of Realtors, noted that the rise in the unemployment rate was due to more Americans entering the job market, increasing labor supply. This growth in supply has consequently slowed wage growth to 3.1%, its slowest pace in five years.
Sam Williamson, a senior economist at First American, suggested that the labor market is returning to a state of low hiring and firing, which should alleviate concerns that recent job gains indicated an accelerating market. He believes this trend could temper expectations for growth and inflation, potentially easing the upward pressure on bond and mortgage rates.
Notable job gains were observed in health care (+17,000), manufacturing (+9,000), and construction (+11,000) sectors. Within construction, nonresidential specialty trade contractors added 12,300 jobs, while residential specialty trade contractors lost 7,900 jobs. The real estate sector also saw a loss of 2,000 jobs. Employment in financial activities has decreased by 129,000 since May 2025, with insurance carriers and related activities accounting for 90,000 of those losses.
Despite the cooling labor market, economists anticipate the Federal Reserve will likely maintain its current interest rate policy. Mike Fratantoni, chief economist at the Mortgage Bankers Association, stated that the softer job market data might be sufficient for the Fed to hold rates steady at its October meeting.
This economic backdrop could provide some relief for homebuyers, who have faced rapidly rising mortgage rates. Rates have climbed from approximately 6.5% in July to nearly 7.3%, significantly impacting affordability.