Key takeaways
The September jobs report showed payroll growth slowing to 29,000 jobs, while unemployment remained low at 4.2% and layoffs stayed limited.
The resilient labor market and 4.3% income growth continue to support consumer spending despite higher food and energy prices.
A cooling labor market without broad job losses gives the Federal Reserve room to focus on persistent inflation.
The September jobs report showed that U.S. hiring lost momentum after August’s rebound. Employers added 29,000 jobs in September, and the unemployment rate edged up to 4.2%, according to the Bureau of Labor Statistics (BLS). Employment changed little across major industries, reflecting the job market’s slower underlying trend.
Labor Statistics; January 31, 2022–September 30, 2026
Revisions weakened the summer hiring picture. BLS lowered July payrolls from a gain of 21,000 to a loss of 10,000 and reduced August’s gain from 162,000 to 133,000, cutting the two-month total by 60,000 jobs. Employers added an average of about 51,000 jobs per month from July through September, as labor force participation rose to 61.8% in September.
How the U.S. job market supports economic growth
Jobs and wages provide the income households use to pay bills, save, and spend. Consumer spending generates more than two-thirds of U.S. economic activity, so changes in employment can quickly shape the broader outlook. 1 The Federal Reserve weighs employment and inflation when it sets short-term policy interest rates.
Slower growth in the available workforce reduces the number of new jobs needed to keep unemployment steady. Economists call this threshold “break-even” employment growth, or the monthly payroll gain consistent with a stable unemployment rate. September’s 29,000 gain fell below many recent estimates, while unemployment remained within its 4.1% to 4.3% range since March. 2
*Break-even employment growth is the monthly job gain needed to keep the unemployment rate steady.y 31, 2023–September 30, 2026
Labor market trends, wages, and consumer spending
Consumer spending remained strong through September. Johnson Redbook sales rose about 9% from a year earlier, while Fiserv point-of-sale transactions, Census Bureau retail sales, and the Bureau of Economic Analysis consumer spending measure each increased about 6%. 1 These four measures track different parts of household activity, and their similar direction reinforces the signal that consumers continue to spend.
“The September jobs report shows that hiring has slowed, but the labor market remains resilient. Low unemployment, limited layoffs, and growing incomes give households a foundation for continued spending.”
– Rob Haworth, senior investment strategy director with U.S. Bank Asset Management Group
The BLS average hourly earnings figure measures the pay private-sector employees receive for each hour worked. The Bureau of Economic Analysis personal income measure is broader, combining wages and salaries with employee benefits, business developments.
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