Payrolls Rose 29,000 in September, July Was Revised Into a Loss, and the Unemployment Rate Held at 4.2%

by Tomas Ferreira · October 2, 2026

Markets Reporter, US Market Current

Nonfarm payroll employment rose by 29,000 in September and the unemployment rate was 4.2%, the Bureau of Labor Statistics reported at 8:30 a.m. ET on Friday, Oct. 2, describing both figures as having "changed little." The agency said employment "in all major industries changed little over the month."

The revisions were the sharper edge of the release. The change in total nonfarm payrolls for July was revised down by 31,000, from +21,000 to -10,000, and August was revised down by 29,000, from +162,000 to +133,000. "With these revisions, employment in July and August combined is 60,000 lower than previously reported," the BLS said. The agency attributes monthly revisions to additional reports received from businesses and government agencies and to the recalculation of seasonal factors.

Put against the trend, September was weak but not out of line with the recent run. The BLS said the 29,000 gain followed an average monthly gain of 45,000 over the prior 12 months. Governor Michael Barr, speaking in Detroit on Sept. 29, had put the 2026 pace at "around 80,000 a month this year, close to reasonable estimates of its breakeven pace," a figure that predates Friday's revisions and uses a different window.

Health care remained the main source of hiring, adding 17,000 jobs, but the BLS flagged that this was "at a slower pace than the average monthly gain over the prior 12 months (+33,000)." Within the sector, ambulatory health care services added 13,000 and hospitals 12,000, while nursing and residential care facilities lost 9,000.

Construction added 11,000, roughly in line with the 10,000-a-month average of the prior year, with nonresidential specialty trade contractors up 12,000. Manufacturing added 9,000 and, the BLS noted, is up 72,000 since a recent low in December 2025; plastics and rubber products and machinery each added 5,000. That tallies with the Institute for Supply Management's September survey, released Oct. 1, which put its manufacturing Employment Index at 52.7%, up 1.5 points from August.

Financial activities was the clearest loser, shedding 7,000 jobs. The BLS said employment in the industry is down 129,000 since a recent peak in May 2025, "with most of the job loss in insurance carriers and related activities (-90,000)." Mining, wholesale and retail trade, transportation and warehousing, information, professional and business services, social assistance, leisure and hospitality, other services and government all showed little change.

On the household side, the number of unemployed people was 7.1 million, and the BLS noted the unemployment rate "has remained in a narrow range of 4.1 percent to 4.3 percent since March." The participation rate was 61.8% and the employment-population ratio 59.2%, both described as little changed and showing "little net change since January." The jobless rate for Black workers rose to 7.0%; rates for adult men (3.9%), adult women (3.6%), teenagers (14.5%), White (3.6%), Asian (2.9%) and Hispanic (4.7%) workers showed little change.

Long-term unemployment was essentially unchanged at 1.9 million, or 27.1% of all unemployed. People working part time for economic reasons held at 4.5 million. Among those outside the labor force who want a job, the number marginally attached fell by 236,000 to 1.5 million, and discouraged workers were little changed at 414,000, per the release.

Wages were quiet. Average hourly earnings for all private employees edged up 5 cents, or 0.1%, to $37.81, and are up 3.0% over the past 12 months. For production and nonsupervisory employees the gain was 7 cents, or 0.2%, to $32.60. The average private workweek held at 34.4 hours; the manufacturing workweek was unchanged at 40.6 hours, with overtime steady at 3.0 hours.

The report lands two and a half weeks after the Federal Open Market Committee raised its target range by a quarter point to 3.75% to 4% on Sept. 16, a 12-0 vote. The committee's statement said "job gains have kept pace with the workforce, and the unemployment rate has changed little," and that "inflation remains elevated." The September Summary of Economic Projections shows a median unemployment-rate projection of 4.1% for 2026 and a median federal funds rate of 4.1% at year-end, which is above the current range.

Fed officials speaking before the release had framed the labor market as stable rather than weakening. Vice Chair Philip Jefferson, at the University of Virginia on Oct. 1, said "a broad range of data indicates that conditions have stabilized," noted that the unemployment rate "ticked down to 4.1 percent in August," and said he expected it "to stay around its current level through the rest of the year." He also said he was "closely monitoring the effects of AI on employment." Friday's 4.2% reading sits at the upper end of that framing but inside the March-to-September range the BLS cites.

For context on the demand side of the economy, the Bureau of Economic Analysis on Sept. 30 revised second-quarter real GDP growth up to a 2.2% annual rate, and reported August real consumer spending up 0.6% on the month with the PCE price index up 3.4% from a year earlier. The Labor Department's Oct. 1 claims report put initial filings at 197,000 for the week ending Sept. 26, with insured unemployment at 1,701,000 for the week ending Sept. 19. The soft payroll print therefore arrives alongside low layoffs and firm spending rather than a broader deterioration.

What the release does not settle is whether September's 29,000 is noise or a step down. On the revised figures July is now a net loss and September is the smallest gain since then, but the BLS itself characterised the month as little changed and the 12-month average remains positive. The October report, which the BLS has scheduled for Friday, Nov. 6, at 8:30 a.m. ET, is the next checkpoint. How markets traded on the number is a matter for Friday's close, which had not occurred when this was written.