September Jobs Report: Only 29,000 Jobs Added as Unemployment Rises to 4.2%

Hiring nearly stalled last month and pay growth slowed, which matters for anyone looking for work or counting on a raise.

The government's monthly jobs report came out on Friday, October 2, and it was weaker than expected. U.S. employers added only 29,000 jobs in September, according to the Bureau of Labor Statistics (BLS), the federal agency that tracks work and pay. Economists had expected somewhere around 84,000 to 90,000 new jobs, depending on the survey.

The unemployment rate rose to 4.2% from 4.1% in August. That rate is the share of people who want a job and are looking for one but don't have one. About 7.1 million people were unemployed in September.

Here is what the report says about job hunting, paychecks and everyday budgets.

What the September jobs report showed

The headline number is called "nonfarm payrolls." It counts how many jobs were added or lost across most of the economy, not counting farm work.

Key numbers from the BLS release:

• Jobs added: 29,000, compared with an average monthly gain of 45,000 over the prior 12 months.
• Unemployment rate: 4.2%. BLS noted the rate has stayed in a narrow range of 4.1% to 4.3% since March.
• Revisions: July was revised down to a loss of 10,000 jobs, and August was revised down to 133,000. Together, those two months had 60,000 fewer jobs than first reported.
• Where jobs grew: Health care added 17,000 jobs, construction added 11,000 and manufacturing added 9,000.
• Where jobs fell: Financial activities lost 7,000 jobs.

Revisions matter because the first estimate is based on incomplete survey answers. When earlier months get marked down, it means the job market was softer than it looked at the time.

A "low-hire, low-fire" job market

The Associated Press described today's job market as "low-hire, low-fire." In plain terms, companies are not laying off many workers, but they are not hiring many new ones either.

That creates two very different experiences:

• If you have a job, things may feel fairly stable for now.
• If you're looking for a job, the search may take longer. The AP reported that job seekers in August were out of work for more than six months on average.

The BLS report also showed 1.9 million people were "long-term unemployed," meaning they had been looking for work for 27 weeks or more. That group made up about 27% of everyone who was unemployed. Another 4.5 million people were working part time because they couldn't find full-time work or their hours were cut.

Paychecks are growing more slowly

Average hourly earnings rose 5 cents in September, or 0.1%, to $37.81. Over the past year, pay is up 3.0%. The AP reported that this was the smallest yearly gain since May 2021.

That slowdown matters because prices are still rising. The most recent Consumer Price Index, a measure of what people pay for everyday goods and services, showed prices up 3.4% over the 12 months through August.

When prices rise faster than pay, your paycheck buys a little less than it did before. Economists call this a drop in "real" wages, meaning wages after adjusting for inflation. Comparing the two numbers, average pay gains are not quite keeping up with prices right now.

What this means for your wallet

A slower job market does not mean everyone will feel a pinch. But it may be a good time to make your budget a bit sturdier. Here are some steps to consider:

• Build or protect a cash cushion. If job searches are taking longer, even a few weeks of extra savings could help cover rent, groceries and bills between paychecks.
• Trim before you need to. Look at subscriptions, dining out and other flexible spending. Cutting a little now is often easier than cutting a lot later.
• Know your unemployment benefits. Rules and payment amounts vary by state. Your state labor department's website explains who qualifies and how to apply.
• If you're job hunting, widen the net. Health care, construction and manufacturing were among the areas still adding jobs in September. Skills from one field may transfer to another.
• Plan for smaller raises. With yearly pay growth at 3.0% and prices up 3.4%, it may make sense to budget as if next year's raise will be modest.
• Keep paying down high-interest debt. Lowering credit card balances can free up cash if your income changes.

The bigger picture

One weak month does not tell the whole story. Monthly job numbers bounce around and often get revised. Still, the September report, along with the downward revisions to July and August, points to a job market that has cooled.

The Federal Reserve, the nation's central bank, watches these numbers closely as it decides on interest rates. Investors reacted to the report too, but for most households the more direct effects are on job security, raises and how carefully to plan the month ahead.

This article is for education only and is not financial advice. Everyone's situation is different.