WASHINGTON (AP) — U.S. employers added a disappointing 29,000 jobs and the unemployment rate ticked up last month, the government reported Friday, a month before voters go to the polls in pivotal midterm elections at a time of discontent over the high cost of living and the state of the economy.
Hiring dropped from a revised 133,000 in August, the Labor Department said. The unemployment rate rose to a still-low 4.2% from 4.1% in August.
Economists had expected September payrolls to come in around 90,000.
Labor Department revisions also shaved 60,000 jobs off combined July and August payrolls.
The new hiring data could draw the Federal Reserve’s attention back to hiring and jobs, given that one of the central bank’s two mandates is to seek maximum employment. Many Fed officials have said in recent weeks that they are primarily focused on their other mission, which is combating inflation. With the job market looking a bit weaker, the Fed may be more inclined to keep its key rate unchanged when it meets next month, rather than raise it.
Average hourly wages were up just 3% last month from a year earlier, the smallest year-over-year gain since May 2021. "In this data, there is no sign that the labor market is stoking inflation,'' said Luke Tilley, chief economist at Wilmington Trust.
Still, the unemployment rate remains low and inflation has been above the central bank’s 2% target for more than five years, so the Fed’s concern about elevated prices is still front and center.
Federal, state and local governments cut 17,000 jobs last month. Professional and business services companies, which provide administrative and technical expertise, trimmed 9,000 jobs.
Healthcare companies created 17,000 jobs in September, but that was barely half the 33,000 they’ve added, on average, each month for the past year. Bradley Saunders, an economist at Capital Economics, wrote that the slowdown in healthcare hiring might reflect the Trump administration’s revocation of work authorizations for 350,000 Haitians.
Construction companies added 11,000 jobs and manufacturers 9,000.
Unemployment rose partly because 485,000 people entered the workforce and not all of them found jobs right away.
The U.S. job market has proven resilient in the face of a series of shocks — trade wars, persistent inflation, high interest rates and a conflict with Iran that has driven energy prices higher. Friday's jobs report is the last one that will come out before the Nov. 3 elections that will determine whether President Donald Trump's Republicans maintain full control of Congress.
Futures for the S&P 500 and Nasdaq composite added to their gains after the data was released on growing hopes that the Fed will hold off on a rate hike. Treasury yields moved lower.
Yet what makes Wall Street happy differs starkly with what brings joy on Main Street.
The U.S. job market has recovered from a dismal 2025, but most Americans are still unsettled about the state of the economy and the high cost of living.
A Thursday poll from The Associated Press-NORC Center for Public Affairs Research finds that only 17% of U.S. adults approve of Trump’s handling of the cost of living. Just 26% approve of his handling of the economy overall, marking a new low.
U.S. consumer confidence dropped this month to the lowest level in more than a decade, according to an index published by the Conference Board. One reason: More than 28% of respondents told the business think tank that they expect fewer jobs to be available in six months, double the 14% who expect more.
The online jobs site Glassdoor reports that its employee confidence index, based on how workers view prospects for their own companies, dropped last month to the lowest level in records going back to the beginning of 2016, a period that includes a global pandemic. It was the index’s third record low this year.
“Employee confidence has been continuously grinding downward over the last year as workers grow increasingly anxious about everything from layoffs to AI,’’ said Glassdoor chief economist Daniel Zhao.
The public’s misgivings about jobs partly reflect an odd feature of the current labor market: Employers aren’t laying off many workers, but they aren’t hiring many either. A Labor Department measure of gross hiring – before subtracting those who quit or lose their jobs – has been stuck in a rut for more than two years.
So economists describe a “ low-hire, low-fire ’’ job market in which those who have jobs are mostly secure, but jobseekers struggle to find work.
“People know that being laid off is unusually costly right now,” said Glassdoor’s Zhao. “They hear from their friends how long they’ve been out of work and had such a difficult time finding a job. That does make layoffs even more scary than usual.’’
In that chilly environment, fewer workers are willing to quit their jobs. “They often feel stuck,’’ Zhao said. “Workers aren’t finding there’s opportunity on the open market to find a better job – one that pays more or offers better work-life balance.’’
Employers – businesses, government agencies and nonprofits – have added an average 68,000 jobs a month so far this year. That’s a big improvement on the 9,700 average new jobs created every month in 2025, the weakest hiring outside a recession since 2002.
Sky Castle Toys in Seattle is still hiring – even though higher transportation costs, driven by the rocketing price of diesel, has eaten into profit margins. Co-founder Joshua Loerzel said the company’s staff has more than doubled to 50 from last year.
He says toys priced under $10 are what retailers want as shoppers cut back on higher-priced playthings. Sky Castle's sales increased 60% between January and August, compared with the same period last year.
At one time, 68,000 jobs a month would have been mediocre at best. But the United States doesn’t need as many jobs as it once did to keep unemployment from rising. Because of baby boomer retirements and Trump’s immigration crackdown, there are fewer people competing for work, and the break-even point could now be as low as zero jobs a month, down from 150,000 a year or two ago.
“I think this is roughly where we’re going to stay,'' said Tilley at Wilmington Trust. ”I expect job growth to remain in this 25,000 to 75,000 band as we go along.''
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AP Retail Writer Anne D'Innocenzio in New York and AP Economics Writer Christopher Rugaber in Washington contributed to this report.
