Unemployment continues to remain steady around the 4% range, according to the Bureau of Labor Statistics (BLS).
The latest Employment Situation Summary from the BLS reports that the unemployment rate grew slightly—but not dramatically—to 4.2%, with the addition of 29,000 jobs. Previously, the unemployment rate sat at 4.1% for August.
Categories like construction and manufacturing grew in jobs by 11,000 and 9,000 respectively. But government roles (-17,000) and temporary health services (-10,900) experienced the greatest drop for September.
“The job market was somewhat weaker in September,” Mortgage Bankers Association SVP and Chief Economist Mike Fratantoni said. “The three sectors that have contributed most of the job growth in recent months, health care, hospitality and government, showed slower growth in September. The financial sector continues to lose jobs at a slow pace, while construction jobs are increasing, particularly in nonresidential construction.”
Prior to the release of the September jobs report, Realtor.com® Senior Economist Jake Krimmel stated that he expected to see “another step forward for a labor market that looks to be recovering.”
After the release, Krimmel noted his disappointment at the report’s missed expectations.
“Today’s September jobs report was a clear miss, throwing some cold water on the labor market recovery we had hoped for. Payrolls rose by just 29,000, far short of the 84,000 consensus and the 100,000 that prediction markets gave a 50/50 chance of topping,” he said.
Yet—as with many economists—Krimmel emphasized that the jobs report is a crucial indicator to the Federal Reserve as to the health of the economy. In response to inflation consistently remaining outside the Fed’s 2% goal, the Federal Open Market Committee (FOMC) unanimously voted to raise rates in mid-September, which now sits in the 3.75%-4% range.
“For the Fed, this probably doesn’t change all that much with respect to hikes this fall,” Krimmel continued. “Despite tepid September job growth, unemployment remains low, so in short, this is no labor disaster that would pull the FOMC’s focus off inflation.”
The latest jobs report also came with several revisions. August’s initial job gains (+162,000) were downwardly revised to a 133,000 job increase instead. July also experienced a significant revision. In its original report, July fell by 23,000 jobs. But in August’s report that number was revised into a 21,000 job gain. Now, the BLS revised July’s data to show a loss of 10,000 jobs.
Krimmel states that the downward revisions for July and August stood out to him, and noted that the unemployment rate’s increase is not as severe as people may believe.
“Layoffs haven’t picked up, and jobless claims have been falling, so the low hire, low fire market is likely to stay entrenched as we head into 2027,” he said.
Similar to Krimmel, Fratantoni does not foresee any rate cuts in the near future.
“With inflation still too high, the Federal Reserve is unlikely to cut rates anytime soon. However, these data showing a softer job market may be enough to keep the Fed on hold at their October meeting. Wage growth continues to run below the pace of inflation, which will hamper consumer spending over time,” he concluded.
