A Big Miss on the Headline
The U.S. labor market stumbled in September. According to the Bureau of Labor Statistics, the economy added only 29,000 non-farm jobs, far below the roughly 84,000 economists had expected. Making things worse, July and August were revised down by a combined 60,000 jobs.
The unemployment rate held at 4.2%, staying inside the narrow 4.1%–4.3% range it has occupied since March. Average hourly earnings rose just 0.1% to $37.81 — a soft reading that eases fears of wage-driven inflation.
Key Numbers
- Non-farm payrolls: +29,000 (forecast ~84,000)
- Previous two months revised down by 60,000 combined
- Unemployment rate: 4.2%
- Average hourly earnings: +0.1% to $37.81
- Unemployed Americans: 7.1 million
- 12-month average job gain: about 45,000
Why Markets Cheered Bad News
Just a week earlier, markets were bracing for a Federal Reserve rate hike in October after hot inflation data and hawkish comments from Fed officials. A cooler-than-expected PCE inflation reading on Wednesday started to shift that view, and Friday's weak payrolls finished the job: the odds of a hike at the October 27–28 FOMC meeting fell to roughly 18–25%.
Stocks rallied on the news, led by tech, with the S&P 500 gaining around 0.7%. Investors still see a meaningful chance of a hike in December, so the debate is far from over.
What to Watch Next
The next big tests are the September CPI report and Fed commentary ahead of the late-October meeting. If inflation keeps cooling while hiring stalls, the "hike" narrative could flip to talk of cuts in 2027.
