US Jobs Growth Slows to 29,000 as Unemployment Rises to 4.2% and Nasdaq Hits Record

US jobs growth slowed sharply in September 2026, with the economy adding just 29,000 positions while the unemployment rate rose to 4.2%, a report that pushed investors to scale back expectations for another Federal Reserve interest-rate increase in October.

Wall Street moved higher after the data, with the Nasdaq reaching a record level during Friday’s session as investors interpreted the weaker labor report as another reason for the Fed to proceed cautiously on rates.

US jobs | Only 29,000 jobs added in September

Nonfarm payroll employment increased by 29,000 jobs in September, according to the U.S. Bureau of Labor Statistics.

Economists surveyed by Reuters had expected an increase of around 90,000.

August payroll growth was revised down to 133,000 from an initially reported 162,000, while July was revised from a gain of 21,000 to a loss of 10,000 jobs.

Together, the July and August revisions removed 60,000 jobs from previous estimates.

Unemployment rises to 4.2%

The unemployment rate edged up to 4.2% from 4.1% in August as more people entered the labor force.

The labor force participation rate increased to 61.8% from 61.6%.

Employment in the household survey rose by about 406,000, but that was not enough to absorb roughly 485,000 people who entered the labor force during the month.

Wage growth also cools

Average hourly earnings increased by just 0.1% in September to $37.81.

Annual wage growth slowed to 3.0% from 3.1% in August, while the average workweek remained unchanged at 34.4 hours.

Which industries added jobs?

Healthcare remained the largest source of employment growth, adding around 17,000 jobs.

Construction added 11,000 positions, manufacturing gained around 9,000 and leisure and hospitality employment increased by about 10,000.

Information employment fell by 10,000, financial activities lost 7,000 positions and professional and business services declined by 9,000.

Government payrolls fell by approximately 17,000 jobs, mostly at the local government level outside education.

Is the U.S. labor market deteriorating?

Despite the weak September payroll figure, there is little evidence so far of a broad surge in layoffs.

Reuters noted that weekly unemployment claims remain near multi-decade lows, while economists continue to describe the labor market as one with relatively low hiring and low firing.

Payroll growth has averaged about 51,000 jobs a month over the past three months.

What does the report mean for the Federal Reserve?

Investors reduced expectations for another interest-rate increase at the Federal Reserve’s October 27-28 meeting following the jobs report.

The Fed raised its benchmark rate by 25 basis points in September to a range of 3.75% to 4.00%, its first increase in three years.

Weak job and wage growth give policymakers an additional reason to proceed cautiously, although inflation remains above the central bank’s 2% target.

Profile News previously examined the surge in U.S. Treasury yields above 5% and the pressure higher borrowing costs are placing on markets.

Nasdaq reaches a record high

U.S. equities rose following the report, with the Nasdaq climbing more than 1% during the session and reaching a record high.

The S&P 500 also advanced, while the U.S. dollar weakened against major currencies.

Reuters reported that traders put the probability of an October Fed rate increase at roughly 21% after the jobs data, compared with about 26% beforehand.

U.S. Treasury yields initially fell after the report before reversing course later in the session.

Weak report, but no labor-market collapse

September’s data point to a clear slowdown in hiring, particularly after the downward revisions to the previous two months, but they do not yet indicate a broad collapse in the labor market.

Attention now turns to upcoming inflation data and the Fed’s late-October meeting for clues on whether policymakers will pause after September’s rate increase or resume tightening later.

Sources

U.S. Bureau of Labor Statistics — September 2026 employment, unemployment and wage data — October 2, 2026.

Reuters — U.S. jobs report, market reaction and Federal Reserve expectations — October 2, 2026.