US Job Growth Slows Sharply in September

The US employment report for September showed a notable slowdown in job growth, with nonfarm payroll employment rising by just 29K, falling short of the expected increase of 85K. This follows revisions to the prior two months' data, which were revised lower by 60K on average. The average monthly gain so far this year stands at 68K, an improvement from last year's pace but still below historical norms.

Construction and manufacturing led the way in September, adding 11K and 9K jobs respectively. These sectors have been gaining ground steadily throughout the year, after struggling in 2025. Retail trade also improved this year, with employers adding 6K jobs in September, despite revisions to July and August's data.

However, three areas of the economy remain on a soft path: information, financial services, and government employment. The information sector has been shedding jobs at an average rate of 11K per month this year, while the financial service industry has cut an average of 12K per month. Government employment fell by an average of 2K per month so far this year.

The unemployment rate ticked up to 4.2%, but more precisely, it was a small increase due to a larger expansion in the labor force. Average hourly earnings rose just 0.1% in September, coming in below expectations and continuing a downward trend that began in 2022.