September Payrolls Miss Badly at 29,000 — Treasury Curve Steepens on Fed Cut Bets

The U.S. economy added 29,000 jobs in September, well below the 90,000 economists polled by LSEG had estimated. The unemployment rate ticked higher to 4.2 percent, exceeding the 4.1 percent expectation.

The Bureau of Labor Statistics released the data Friday, revealing significant downward revisions to prior months. July's payroll numbers were revised down 31,000, shifting from a reported gain of 21,000 to a loss of 10,000. August figures saw a 29,000 reduction, moving from a gain of 162,000 to 133,000. The cumulative 60,000-job downward revision for July and August signals a labor market cooling faster than previously understood—a shift that extends duration risk across the Treasury curve as investors reprice Fed expectations.

Private payrolls increased 46,000 jobs in September, also below LSEG's 85,000 estimate. The private sector's August gain was revised down to 89,000 from 127,000.

Government payrolls contracted 17,000 jobs in September. The federal government shed 1,000 jobs, state government employment fell 3,000 and local government employment contracted 13,000. Most of the state and local losses occurred in education.

The manufacturing sector added 9,000 jobs in September, slightly below LSEG's 10,000 estimate. August gains were revised down to 15,000 from 16,000.

Healthcare employment increased 16,700 jobs in September, with most gains in ambulatory healthcare services at 13,400 and hospitals at 12,000. Nursing and residential care facilities lost 8,700 jobs. The sector's growth rate was slower than its 12-month average of 33,000 monthly gains.

Construction employment added 11,000 jobs in September, slightly above its 12-month average of 10,000. Nonresidential specialty trade contractors increased 12,300 jobs.

Financial activities contracted 7,000 jobs in September and have shed 129,000 jobs since a May 2025 peak. Most losses occurred in insurance carriers and related activities.

Long-term unemployed—jobless for 27 weeks or more—remained at 1.9 million in September, accounting for 27.1 percent of all unemployed individuals. Additionally, 4.5 million people were employed part-time for economic reasons.