America Added 29,000 Jobs in September, Unemployment Ticked Up to 4.2%

The U.S. economy added 29,000 jobs in September and the unemployment rate rose to 4.2 percent.

Economists had expected the economy to add 85,000 jobs and the unemployment to hold steady at 4.1 percent.

The U.S. labor market has experienced a significant shift away from dependence on an immigration-driven workforce. Jobs numbers that may seem anemic compared with recent years may actually indicate healthy—even robust—growth under current conditions, according to economists.

Employment in prior months was revised down. July is now recorded as a loss of 10,000, down from a gain of 21,000. August’s gain was revised from 162,000 to 133,000.

The private sector gain was stronger than the headline increase. Private employers added 46,000. Goods-producing jobs added 18,000. Eight million jobs were added in durable goods manufacturing and 11 in construction.  The services side of the economy added 28,000. Government payrolls shrank by 17,000.

The labor force expanded in September, adding 485,000. The labor force participation rate rose by 0.2 percent.

The small rise in unemployment in September came from people entering the labor force, not from people losing jobs.

Many economists now estimate the so-called “break-even” rate of job growth—the rate required to keep unemployment from rising—may be as low as zero. Others estimate that it may be from 10,000 to 55,000 jobs. As a result, some months are likely to see negative payroll changes even without increasing the level of joblessness in the U.S. By contrast, when immigration was running at higher levels from 2021 through 2024, the economy needed to add more than 100,000 jobs monthly to keep pace with labor-force growth.

Retirements are also driving down the growth of the labor force, as an increasing number of members of the large Baby Boom generation leave work and smaller generations fail to fully replace them.

This month’s report comes at a crucial for the Federal Reserve and markets. Investors are uncertain whether the Fed will lift interest rates for a second time when it meets later this month or keep them on hold. Weaker-than-expected job growth may persuade some policymakers that the Fed can be patient while raising rates.