Job growth in the U.S. slowed down in September, with nonfarm payroll jobs jumping just 29,000 from a month prior, according to data released Friday by the U.S. Bureau of Labor Statistics.
In addition to this, data for the prior two months was revised down by 60,000 jobs.
September also saw the unemployment rate tick up slightly to 4.2% with 7.1 million people unemployed. The unemployment rate has stayed between 4.1% and 4.3% since March.
According to the National Association of Realtors’ (NAR) chief economist Lawrence Yun, the slight rise in the unemployment rate was for a good reason.
“More Americans are searching for a job rather than being out of the labor force,” Yun said in a statement. “To be counted in the statistics, you must be looking for a job, and nearly 700,000 more entered the job market. That growth in the labor supply has slowed wage growth to 3.1%, the slowest rise in 5 years.”
Looking at the data as a whole, Sam Williamson, a senior economist at First American, said it looks like the labor market is settling back into low-hire, low-fire mode, which should ease concerns that the uptick in jobs in August was a sign of an accelerating job market.
“That could cool expectations for growth and inflation, easing some of the pressure that has pushed bond yields and mortgage rates sharply higher in recent weeks,” Williamson said.
Notable job gains for the month were recorded in the health care (+17,000 jobs), manufacturing (+9,000 jobs) and construction (+11,000 jobs) sectors.
The construction sector has added an average of 10,000 jobs per month over the prior 12 months. But despite the month-over-month increase, the majority of the growth occurred in nonresidential specialty trade contractors, which added 12,300 jobs during the month. The residential specialty trade contractor segment lost 7,900 jobs, while residential building construction added 3,000 jobs.
Meanwhile, the real estate segment lost 2,000 jobs from a month prior. The report also noted that employment in financial activities as an overall segment is down 129,000 since a peak in May 2025. The majority of this job loss (-90,000 jobs) has come from the insurance carriers and related activities segment.
Despite the cooling labor market, economists feel the Federal Reserve will not undo its recent interest rate hike.
“However, these data showing a softer job market may be enough to keep the Fed on hold at their October meeting,” Mike Fratantoni, the Mortgage Bankers Association’s senior vice president and chief economist, said.
Economists say this could be good news for consumers.
“For homebuyers, the softer backdrop could open the door to some much-needed relief following the sharp run-up in mortgage rates over the past several weeks,” Williamson said. “Rates have climbed from roughly 6.5% in July to nearly 7.3%, absorbing much of the past year’s affordability improvement from rising incomes and slower house-price growth.”
