America’s employment situation delivered mixed signals in September, as the delayed release of the monthly nonfarm payrolls report showed more jobs created than expected, but also an uptick in the employment rate as well as downward revisions to the prior two months.
The Bureau of Labor Statistics (BLS) reported Thursday that nonfarm payrolls grew by 119,000 in September, which was sharply ahead of economists’ estimates for 50,000 jobs created. However, August’s tally was significantly downgraded, from 20,000 jobs created to 4,000 jobs lost. Meanwhile, July’s payroll figure was cut back by 7,000 jobs to 72,000. Unemployment, meanwhile, continued to climb at 4.4%, outpacing estimates for 4.3% and hitting its highest level in nearly four years.
The release, which provided the first governmental jobs data since August’s report out Sept. 5, sparked little confidence in economists and analysts, who also were split about the Federal Reserve’s interest-rate intentions for its December meeting.
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“It’s still foggy,” says Steve Wyett, Chief Investment Strategist at BOK Financial. “The delayed September employment report showed a better than expected number of new jobs but an increase in the headline unemployment rate. Based on recent changes in immigration policies we are seeing declines in the labor force making the calculation of the unemployment rate a bit harder to forecast.”
Also falling short of forecasts was September’s hourly earnings figure, which grew by 0.2% month-over-month, to $36.67. Estimates were for 0.3% improvement. Over the past year, average hourly earnings have grown by 3.8%.
Here’s a brief look at the September jobs report’s most pertinent details:
- September payrolls: +119,000 MoM (estimate: +50,000)
- September unemployment: 4.4% (estimate: 4.3%)
- September hourly earnings: +0.2% MoM (estimate: +0.3%)
- August payrolls (revised): -4,000 (+20,000 previously)
- July payrolls (revised): +72,000 (+79,000 previously)
Health care continued to be a source of strength for payrolls, adding 43,000 jobs, which was just above the 12-month average of 43,000. The economy also saw improvement in food services and drinking places (37,000) and social assistance employment (14,000).
The biggest losses were seen in transportation and warehousing, which shed 25,000 jobs. Manufacturing struggled again, losing 6,000 jobs, and federal employment continues to dwindle, down 3,000 jobs in September to reach a total contraction of 97,000 jobs since peaking in January. (And this figure does not include employees on paid leave or receiving ongoing severance pay.)
Markets Unsure Whether the Fed Will Cut Again
Wall Street has waffled of late over whether the Federal Reserve will cut the target range for its benchmark interest rate during the final Federal Open Market Committee (FOMC) meeting of 2025, set for Dec. 9-10.
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That’s in large part because the Fed will be dealing with a less-than-ideal set of data because of the government shutdown that only recently ended. The BLS canceled the October 2025 nonfarm payrolls report, citing an inability to collect data while the government was closed. A full November report will also include October jobs data but not the unemployment rate; however, none of that data will be released until Dec. 16—after the FOMC has met.
“Due to the BLS’ delayed publication schedule, the Federal Reserve will have to rely upon employment and inflation data only through September at its upcoming FOMC meeting in December,” says Jerry Tempelman, VP of Fixed Income Research at Mutual of America Capital Management.
The CME FedWatch Tool, which uses Fed funds futures prices to track the probability of a change to the federal funds rate, currently shows a 40% chance that the Fed will deliver another quarter-point cut, to a range of 3.5%-3.75%, during the FOMC meeting. That’s up from the 30% probability that futures indicated yesterday, but down from the the coin flip implied by last week’s data.
“A December cut remains possible given continued labor market softness as expressed by the unemployment rate,” says Kay Haigh, global co-head of Fixed Income and Liquidity Solutions in Goldman Sachs Asset Management. “Weak hard data and close-to-target inflation look set to drive policy going forward, despite recent hawkish noises. The setup is in place for Powell to continue his risk-management approach to the labor market before his term as Chair expires in May.”
This report will be updated.
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More Expert Reactions to September’s Jobs Report
Here’s what other strategists, financial managers, and experts had to say about the most recent employment situation:
Jeff Schulze, Head of Economic and Market Strategy, ClearBridge Investments
“Although job cut announcements have risen, actual layoffs remain tame as evidenced by this morning’s decline in initial jobless claim filings back toward recent lows. We believe the December fed meeting remains a toss-up, with the hawkish case being bolstered by strong headline job creation and the dovish case supported by the rise in the unemployment rate to 4.4%.
More immediately, today’s payrolls release is being viewed as a ‘good news is good news’ dynamic for equities, which we believe is appropriate given that today’s data does not show downside risks to labor materializing while keeping the prospect for further rate cuts alive whether next month or in 2026. This dynamic should provide support for risk assets in the near term.”
Lara Castleton, U.S. Head of Portfolio Construction and Strategy, Janus Henderson Investors
“These mixed signals can give both bulls and bears plenty of narrative fuel, but how much will it matter? Markets are already trading on November data and investors should keep that lens in mind, focusing on company fundamentals rather than stale labor numbers. With October’s report permanently lost and November’s delayed until mid-December, the real question is what this means for the Fed’s next move.
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Looking forward, investors should stay anchored to fundamentals, like Nvidia’s strong earnings yesterday, which continue to drive equity sentiment, while staying nimble and diversified in fixed income as the Fed’s rate cut path will remain cloudy.”
Scott Helfstein, Head of Investment Strategy, Global X
“The September jobs reading is a meaningful improvement over the past three months though not exactly blowing the doors off. Unemployment ticked up, but like the economy, the labor market continues growing modestly. The September jobs data was better than expected, potentially reinforcing fears that the Fed is hawkish. We continue to believe that is overdone, and the Fed is concerned about the labor market amid slowing inflation. This jobs report should be a welcome reprieve after some tepid data on private payrolls the past couple of months. The report reflects the idea of the no-hire, no-fire economy.”
Jason Pride, Chief of Investment Strategy and Research, Glenmede
“Today’s report ends the drought of official labor market data, but it also reinforces that alternative data sources can provide a reasonable read on labor market trends. For example, the Conference Board’s labor differential had hinted at a gradual rise in unemployment, ultimately borne out by September increase to 4.4%. In addition, state-level jobless claims had indicated that the labor market was holding up reasonably well.”
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