The first federal employment report released since the government shutdown interrupted data collection delivered an upbeat surprise for President Donald Trump, offering a rare positive headline in an otherwise downbeat economic landscape.
According to the Bureau of Labor Statistics’ release Thursday morning, the U.S. economy added 119,000 jobs in September—well above expectations of about 50,000. August’s payroll figure, initially reported as a 22,000 gain, was revised down to a 4,000-job loss.
The report—originally slated for early October—also showed the unemployment rate ticking up to 4.4%, from 4.3% in August.
Why It Matters
Economists had been watching this report closely for clues about whether the labor market is sliding into a deeper slowdown after months of muted hiring. With layoffs rising, some fear the country may be drifting away from the “low hire, low fire” environment that Federal Reserve Chair Jerome Powell recently described, toward broader weakness.
One analyst said the September data indicates the labor market is “still far from recessionary territory,” and the administration has quickly pointed to the numbers as proof of economic resilience. Others argue the report’s age limits its usefulness, and that more recent conditions could be deteriorating faster than these figures show.
What To Know
Job gains in September were concentrated in a few areas. Health care added 43,000 jobs, food services and drinking places gained 37,000, and social assistance rose by 14,000. Those increases were offset by losses in transportation and warehousing (25,000 jobs down) and continued declines in federal government employment—down 3,000 in September and 97,000 since January.
Mark Hamrick, senior economist at Bankrate, said the report helps “quell recession fears,” but highlighted warning signs. The unemployment rate, drawn from a separate survey than payrolls, is now at its highest level in nearly four years. Revisions to prior months also painted a weaker trend: July’s gain was cut from 79,000 to 72,000, and the August revision lowered the two-month total by 33,000.
Chris Zaccarelli, chief investment officer at Northlight Asset Management, said that stronger-than-expected jobs growth—combined with Nvidia’s recent earnings success—could lift markets by easing two major investor anxieties: a possible AI bubble and a stagnant economy. Still, he cautioned that the September data is “so backward-looking” that some may dismiss it as out of step with what’s happening right now.
Indeed, private indicators suggest hiring weakened sharply in October. ADP estimated that private employers shed about 11,250 jobs per week over the four weeks ending October 25. Goldman Sachs analysts estimated that nonfarm payrolls fell by roughly 50,000 in October, which would be the steepest monthly decline since 2020.
Layoff announcements have also climbed. Challenger, Gray & Christmas reported 153,074 job cuts in October, the highest October total in 22 years.
What People Are Saying
Hamrick summed up the situation by noting that while the return of data is welcome after the shutdown, the September report is already dated and doesn’t fully capture today’s economy. He said a clearer picture should emerge with the next report in mid-December.
Secretary of Labor Lori Chavez-DeRemer called the numbers “a solid report for the American people,” adding that reopening the government was essential so the September data could be released.
Economist Stephen Moore argued the economy is being underestimated, pointing to continued investment and consumer spending and welcoming the jobs upside surprise.
Powell, speaking October 14 at the National Association for Business Economics meeting, warned that risks to employment have increased in a softer labor market. Even without the September report at the time, he said available evidence suggested both hiring and layoffs were subdued, and perceptions of job availability and hiring difficulty were trending downward.
Daniela Hathorn, senior market analyst at Capital.com, described the data as broadly encouraging: wages rose, payroll growth was positive in both private and government areas, and the participation rate increased alongside the slightly higher unemployment rate. She added that markets may treat the report as old news after the initial reaction, depending on how heavily Fed officials weigh it.
What Happens Next
The BLS confirmed Wednesday that it will not publish a full October jobs report, which had been scheduled for November 7, due to shutdown-related data problems. October payroll figures will instead be folded into the November report released December 16, though that release will not include an October unemployment rate.
That timing matters for monetary policy. The Federal Reserve meets next on December 9–10, meaning officials will decide on interest rates without a fresh standalone read on October labor-market conditions. Minutes from the Fed’s October meeting showed internal debate about the path forward after two consecutive rate cuts.
Market expectations remain split: the CME FedWatch tool shows about a 60% chance rates stay unchanged and a 40% chance of another cut at the December meeting.
