September Jobs Report: 29,000 Added as Wage Growth Slows to 3%

A weak headline number that needs a closer read

The U.S. labor market had a quiet September, and some of the quiet looks like trouble. The Bureau of Labor Statistics reported that nonfarm payrolls rose by only 29,000 and that the unemployment rate was 4.2 percent. The agency called both numbers "little changed" and found no meaningful movement in any major industry.1 Forecasters had expected more. Economists polled by Dow Jones were looking for 84,000 jobs and an unemployment rate of 4.1 percent.13 Econoday's consensus was 85,000, with forecasts ranging from 40,000 to 136,000.6

Revisions made the picture worse. July was cut from a gain of 21,000 to a loss of 10,000, and August fell from 162,000 to 133,000, so the two months together now show 60,000 fewer jobs than first reported.1 Thomas Simons, chief U.S. economist at Jefferies, said the August jump now looks like a catch-up after very weak hiring in June and July rather than the start of a stronger trend.13

That fits the longer record. In the 12 months before September, payrolls grew by an average of just 45,000 a month.1 Viewed that way, September was not a sudden break. It is one more month in a job market that has been barely growing for a year.

The jobless rate rose, but mostly because more people looked for work

The rise from 4.1 to 4.2 percent is easy to misread. CNBC reported that it came mainly from people entering the labor force, not from people losing jobs.13 The household survey shows employment up 406,000 and the labor force up 485,000. The number of unemployed rose by 78,000.16 Labor force participation climbed 0.2 percentage point to 61.8 percent.20

Other measures point the same way. The broader U-6 rate, which counts discouraged workers and people stuck in part-time jobs, fell to 7.6 percent, its lowest since January 2025.13 The number of people marginally attached to the labor force dropped by 236,000 to 1.5 million.1 The unemployment rate has stayed between 4.1 and 4.3 percent since March.12

The two surveys disagree, and that explains why commentators read the report so differently. Robert Sockin, chief U.S. economist at PGIM, told The New York Times the market is "at worst stable" and warned against "sticker shock" over the 29,000 figure. He noted that government payrolls fell 17,000 while private payrolls grew by 46,000.10 Heather Long, chief economist at Navy Federal Credit Union, also called the market stable, while saying Americans are frustrated by how few opportunities there are.13

We think the stability case is right about layoffs and wrong about the overall picture. Firing is still rare. CNBC described a low-hire, low-fire economy, with weekly jobless claims low and one indicator showing the lowest layoff rate in four years.13 But there are weak spots. The Black unemployment rate rose to 7.0 percent. About 1.9 million people have been out of work for 27 weeks or more, which is 27.1 percent of all unemployed people.1 People already in jobs are mostly holding on. People looking for jobs are having a harder time.

Wage growth falls behind inflation

Pay may be the biggest story in this report. Average hourly earnings for private-sector workers rose 5 cents, or 0.1 percent, to $37.81. That left the 12-month gain at 3.0 percent.1 It is the slowest annual pace since May 2021. Wall Street had expected 0.3 percent for the month and 3.1 percent for the year.13

Prices rose much faster. On October 14, BLS reported that inflation-adjusted average hourly earnings fell 0.5 percent in September, as the consumer price index rose 0.6 percent while pay rose 0.1 percent.14 Inflation-adjusted pay is down 0.7 percent from a year earlier.7 The New York Times tied the inflation run-up to the war in Iran, along with tariffs and higher energy costs. It said September's wage growth was the slowest since the pandemic and well below inflation.10 Long put it bluntly: wage growth hit a five-year low and inflation is erasing it completely, just before the holiday season.13

Not every measure is as weak. Pay for production and nonsupervisory workers rose 0.2 percent to $32.60.1 The Senate Joint Economic Committee's figures put that group's annual gain at 3.3 percent and weekly earnings for all private workers up 3.63 percent.5 Those numbers help, but none of them is close to a 0.6 percent monthly rise in prices. When inflation beats pay this clearly, most workers are losing ground.

One detail differs between sources. CNBC put the average workweek at 34.6 hours.13 The official BLS release says it held at 34.4 hours.1 The BLS figure should be treated as the correct one.

Tech layoffs keep coming

The information sector lost 10,000 jobs in September, which CNBC connected to concerns about how artificial intelligence will affect hiring.13 Company announcements since the report show the cuts continuing.

In the first half of October, several well-known tech companies announced layoffs:

• HubSpot said on October 6 it would cut 7 percent of its workforce, about 660 people. CEO Yamini Rangan said the cuts were "not driven by AI-related efficiencies," even as the company reorganizes around AI-driven customer outcomes.23
• Netflix is cutting about 1,000 jobs, or 6 percent of its staff, mostly in product, technology, legal and HR. The Los Angeles Times said it is believed to be the largest layoff in Netflix's history. The cuts follow its failed bid for Warner Bros. Discovery, slowing growth in viewing time and more competition from rivals such as YouTube.29
• Amazon cut fewer than 1,000 corporate jobs in its Stores division across the U.S., India and the U.K.23 Earlier rounds in October and January removed about 30,000 jobs.22
• Flock, the surveillance camera company, is cutting about 18 percent of its staff, roughly 270 people, as it faces public criticism and lawsuits.2123
• Airtable laid off what was described as a large part of its staff after Bending Spoons bought it for $1.3 billion.23
• Workday is cutting about 140 jobs in the Bay Area as part of a plan to reduce its global workforce by 2.5 percent.22

Industry trackers show how big the year has been. Layoffs.fyi counted 133,217 tech workers laid off at 323 companies through October 15. That already exceeds the 122,606 counted for all of 2025, though it is roughly half of 2023's peak of 265,660.26 Fewer companies are cutting than in 2023, but each cut is bigger, averaging about 412 people per company compared with about 223 then.26 These are private counts built from public reports, not government data. Some entries on employee forums, such as a reported 15,000-person Amazon cut, are marked as rumors and should be treated that way.25

The reasons companies give vary. Some point to AI. HubSpot denies AI is the cause. Amazon founder Jeff Bezos blames hiring too many people during the pandemic.23 Bending Spoons says smaller teams work better.22 In our reading, the common thread is investor pressure to spend less on headcount and more on AI infrastructure. That pressure is getting stronger: tech stocks sold off in mid-October amid worries that companies relying on debt for heavy AI spending may struggle as bond yields rise.24

There is a little good news for tech workers. Indeed's index of software development job postings was 21 percent higher than a year earlier on October 9, though still 22 percent below its February 2020 level.26 Companies are hiring again for some roles while cutting others.

What it means for the Fed

The report quickly changed expectations for interest rates. The Federal Reserve has been more focused on inflation than on jobs, and Simons called the report "the nail in the coffin for an October hike."13 Prediction-market odds that the Fed would hold rates in October jumped to about 85 percent after the release.15 Long still expects the Fed to raise rates in December.13

Wage growth this slow undercuts the idea that pay is pushing inflation higher. The New York Times said Fed officials have long argued the job market is not driving prices, and September's numbers support that.3 The result is an awkward position for the central bank: inflation is driven by the war, tariffs and energy costs, while wages lag and hiring is close to zero. Raising rates would do little to fix the first problem and could make the second worse.

Our read

This report is not a recession signal. Layoffs across the economy are still low, people are joining the labor force, and the broader underemployment rate improved. But it would be wrong to call the market healthy. A year of very weak job growth, downward revisions, falling inflation-adjusted pay and a steady run of tech layoffs all point to a market where people with jobs are mostly safe and people without them are struggling. The October report is due on November 6.1 It comes days after the midterm elections, when voters will be weighing the cost of living and the state of the economy.15