US adds 29,000 jobs as unemployment rises to 4.2%

An employment report published on October 2 showed that US employers created a seasonally adjusted 29,000 jobs in September, with the jobless rate climbing to 4.2%. The payroll gain was below economists’ forecasts and followed downward revisions to the July and August figures.¹²

Hiring falls short of forecasts

CNBC said economists polled by Dow Jones had forecast the addition of 84,000 jobs, with joblessness at 4.1%. The Guardian cited a separate forecast of just under 70,000 jobs. The reported increase of 29,000 was below both estimates.¹²

The latest revisions also weakened the picture from the preceding two months. The August payroll estimate was reduced to a gain of 133,000, while July was revised from an increase to a loss of 10,000. Together, those revisions removed 60,000 jobs from the previously reported totals.¹²

The revised August figure superseded an initial report showing a gain of 162,000, which had been the strongest since March. Payroll growth had averaged 80,000 a month during 2026 before the September report, though the monthly figures had varied considerably.¹²

Mixed evidence beneath the slowdown

Other labour indicators suggested limited pressure from dismissals. First-time claims for unemployment insurance declined to 197,000 in the latest week, while the Guardian reported that claims had fallen for four consecutive weeks. Challenger, Gray & Christmas said September layoffs were 18% lower than in August and 20% below their level a year earlier.¹²

Job openings and hiring were little changed in August, while CNBC reported that payroll gains had recently spread across more sectors, layoffs remained low and vacancies had moved slightly higher overall. Federal Reserve vice-chairman Philip Jefferson said: “In the labor market, a broad range of data indicates that conditions have stabilized.”¹²

Sentiment among workers was less positive. Glassdoor’s September survey put employee confidence at a record low for the third time in 2026. Its chief economist, Daniel Zhao, pointed to mounting concern about job security, economic uncertainty and inflation, while workers also cited fears about artificial intelligence.²

Interest-rate expectations shift

Federal Reserve officials were expected to assess the employment figures alongside inflation when considering interest rates. Before the report, markets had already reduced the perceived probability of an increase at the October 27-28 meeting and regarded a December move as more likely. After the payroll release, traders interpreted the weaker figures as further evidence that the central bank would leave rates unchanged in October.²

The Federal Reserve had raised interest rates in September, with higher prices cited as the reason, according to the Guardian. New York Fed president John Williams had said there was “no need for urgency” about another increase. Stock futures rose after the jobs report, while Treasury yields declined.¹²