U.S. September Hiring Falls Short of Forecasts, Jobs Report Shows

Hiring slowed sharply in September, falling well short of expectations as months of elevated inflation weighed on consumers and unsettled bond markets, according to the federal government’s latest jobs report.

U.S. employers added 29,000 jobs in September, down significantly from the 162,000 jobs created in August, data from the U.S. Bureau of Labor Statistics showed. Economists had forecast an increase of 84,000 jobs.

The unemployment rate edged higher, rising from 4.1% to 4.2%.

September’s job growth also fell below the average monthly increase of 45,000 jobs recorded over the previous 12 months.

Healthcare led all sectors in job creation, adding 17,000 positions in September. Even so, the increase was well below the industry’s average monthly gain of 33,000 jobs over the prior year, according to BLS data.

Manufacturing employment posted a modest gain of 9,000 jobs last month. The sector has now added 72,000 jobs since reaching a recent low in December 2025.

The jobs figures arrived several weeks after the Federal Reserve delivered its first interest-rate increase in three years. The move is intended to curb rising prices, but higher borrowing costs could eventually slow business investment and hiring.

The economy has also displayed other signs of pressure in recent months, including a selloff in bonds and renewed increases in oil and gasoline prices.

Consumer sentiment fell last month to a level near the lowest point ever recorded in the University of Michigan survey’s 74-year history.

Even with those challenges, the labor market has remained relatively resilient so far this year.

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The U.S. economy added roughly 80,000 jobs per month on average during the first eight months of the year, according to an analysis of BLS data by financial services firm Raymond James. That pace exceeded the firm’s projection of 70,000 monthly jobs gains for the period.

The war in Iran pushed gasoline prices higher and sent inflation to a three-year peak. Price pressures eased during the summer, but ongoing fighting has kept inflation well above prewar levels.

Annual inflation stood at 3.4% in August, the latest month available, leaving the rate more than a percentage point above the Federal Reserve’s 2% target.

The combination of persistent inflation and a durable labor market led the Fed to raise interest rates by a quarter of a percentage point last month.

Investors put the odds of another rate increase in October at 20%, according to CME Group’s FedWatch Tool, which tracks market expectations.

“The plain fact is that inflation is too high and has been for too long,” Fed Chair Kevin Warsh said at a news conference in Washington, D.C., last month.

The central bank’s policy could nevertheless weaken hiring and push the unemployment rate higher, although the effects of interest-rate changes typically emerge only after a delay of several months.

By several measures, however, the economy continues to show strength.

Gross domestic product expanded during the three months ending in June, defying concerns that the Iran war would trigger a downturn. Consumer spending, which represents about two-thirds of U.S. economic activity, climbed 0.6% in August from July, marking its biggest monthly increase since March 2025, government data released Wednesday showed.