US added just 29,000 jobs in September in sharp drop from last month’s gains

US employers added just 29,000 jobs in September, a sharp drop from last month’s gains, and unemployment rose slightly to 4.2%, a sign of a cooling labor market in the final jobs report before the midterm election.

The numbers were under half of economists’ expectations of just under 70,000 new jobs . Most job gains were concentrated in the healthcare industry, which added 17,000 new jobs, while the information, financial and professional industries saw losses, according to the latest data from the US Bureau of Labor Statistics.

Earlier jobs figures were also revised down: Initial reports from July and August altogether dropped by 60,000. The labor market contracted by 10,000 jobs in July after revisions, while August saw 133,000 jobs added.

Growth in average hourly earnings slumped to 3%, the lowest rate in over five years.

The unemployment rate has remained relatively steady since last year, when it hit 4.5% in November. US jobless claims also inched lower for the fourth week in a row, the labor department said on Thursday.

But a closer look at the data also reveals how not all Americans are experiencing the same labor market. Unemployment among Black Americans grew an entire percentage point to 7%, double the rate of white Americans.

Though job growth slumped over the summer – the labor market unexpectedly contracted in July and figures in June and May were revised sharply down from initial reports – 162,000 jobs were added in August, the highest since March.

Job openings and the number of hires have also remained little changed in August, according to the recent data from the labor department, as the “slow-hire, slow-fire” job market continues.

Data from private employers released by the payroll firm, ADP, earlier this week had painted a much rosier picture of the labor market. It found that private sector hiring accelerated last month for the first time since May, carried by growth in the healthcare, education and hospitality industries, and private employers added 90,000 new jobs.

The labor market has remained largely strong this year even as the US-Israel war on Iran has upped inflation , especially energy prices. Last month, the Federal Reserve raised interest rates for the first time in three years, citing higher prices.

At the time, the Fed chair, Kevin Warsh, emphasized the strength of the US labor market, which “is basically running consistent with full employment”, but he noted that “inflation is too high and has been for too long”.

Though the data still reflects an overall solid jobs market, the September release cools expectations for the US Federal Reserve to increase rates again in its final meeting before the 3 November midterms. Most central bank officials penciled in at least one more rate hike before the year’s end, which is now more likely to come at the Fed’s December conference.

But higher prices continue to be the biggest economic pain point for Americans. Mortgage rates accelerated to their highest level in three years on Thursday from 7% to 7.28%, the largest weekly jump since 2022. The 10-year treasury yield, which underpins mortgages and other loans, also reached a 24-year high as the recent global bond sell-off continued. Meanwhile, higher oil prices have cost Americans an estimated $936 per household.

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