The US added only 29,000 jobs in September, the slowest pace since early 2020, and the unemployment rate edged up to 4.2%.

Growth far below expectations

Economists had forecast just under 70,000 new positions, according to the Wall Street Journal’s ADP estimate, but the Labour Department’s final figure was less than half that number. The shortfall marks a pronounced deceleration from August’s 517,000 jobs, a rebound that had raised hopes of a sustained hiring surge.

Analysts at Bloomberg noted that the data suggest the labour market is losing momentum as the economy adjusts to higher borrowing costs.

US Labor Department headquarters Washington

Healthcare leads the limited gains

Despite the overall weakness, the healthcare sector posted the bulk of September’s modest increase, adding roughly 13,000 positions, according to the department’s breakdown. The sector’s expansion reflects ongoing demand for nursing and allied health staff, even as hospitals grapple with staffing shortages.

Other major industries, including manufacturing and professional services, reported near‑flat employment, signalling that broader hiring is stalling.

Policy and market implications

The report arrives on the eve of the US midterm elections, a political calendar that traditionally heightens scrutiny of the economy. Federal Reserve officials have repeatedly warned that a cooling labour market could justify a pause in interest‑rate hikes, a sentiment echoed by the Fed’s latest minutes.

Wall Street reacted cautiously; the S&P 500 slipped 0.3% in early trade, while the US dollar weakened against a basket of major currencies. Treasury Secretary Janet Yellen described the figures as “a reminder that the economy remains vulnerable to external shocks”.

What lies ahead

With the labour market showing signs of slack, economists expect the Fed’s next policy meeting to lean towards a more dovish stance, though any decision will hinge on upcoming inflation data.

Meanwhile, political candidates on both sides of the aisle are likely to cite the report – either as evidence of a resilient economy or as proof that more job‑creation measures are needed – as the campaign enters its final stretch.