September US Payrolls Come In at Just 29,000, Far Below the 90,000 Forecast

The United States added only 29,000 nonfarm payroll jobs in September, a dramatic miss against the consensus estimate of around 84,000 to 90,000 and a steep drop from August's revised figure of 133,000. The unemployment rate ticked up to 4.2%, above both the prior month's 4.1% and the forecast of 4.1%, while private payrolls rose just 46,000 against an expectation of 81,000. Government employment fell 17,000 after gaining 44,000 in August.

The report also carried negative revisions to prior months. July payrolls were revised down to negative 10,000 from an initial positive 21,000, putting that month in outright contraction, while August was cut by 29,000 to 133,000. Combined, the two-month net revision subtracted 60,000 jobs from previously reported totals.

Wage growth cooled sharply alongside the headline miss. Average hourly earnings rose just 0.1% month over month against an estimate of 0.3%, bringing the year-over-year rate to 3.0%, below the 3.1% forecast. The labor force participation rate came in at 61.8%, slightly above estimates, while the U-6 underemployment rate fell to 7.6%.

Markets moved quickly on the data. Treasury yields initially plunged as traders pared back bets on a Federal Reserve rate hike at the October meeting, with Reuters reporting the Fed is now broadly expected to skip that meeting. The 2-year and 5-year yields briefly recovered to pre-report levels before yields stabilized, and the 10-year yield ticked modestly higher by late afternoon. Tech stocks jumped, Canada's TSX climbed, and Bitcoin and gold both rallied as rate-hike fears receded. One analyst noted the weak print effectively removes the case for any further Fed hike before 2027.