US employers added just 29,000 jobs in September, sharply below expectations, while the unemployment rate rose to 4.2 per cent, pointing to a cooling labour market even as layoffs remain limited, government data showed on Friday.The September payroll gain was well below the 90,000 increase economists expected. August’s job growth was also revised down to 133,000 from 162,000 reported earlier.The weak headline figure may not fully reflect an underlying deterioration in employment. Economists said seasonal-adjustment factors, including the timing of the Labor Day holiday, likely contributed to the unusually low September gain and the downward revision to August. There have also been few signs of a broad increase in layoffs, with initial unemployment claims remaining historically low.The unemployment rate rose from 4.1 per cent in August to 4.2 per cent in September. The labour market has remained relatively resilient this year despite high interest rates, trade tensions and the economic impact of the conflict involving the US and Iran.Employment in most major sectors changed little in September. Healthcare added 17,000 jobs, while construction gained 11,000 and manufacturing added 9,000.Financial activities continued to lose jobs, with employment in the sector falling by 7,000 in September. The sector has shed 129,000 jobs since reaching a recent peak in May 2025, with most of the decline concentrated in insurance.Average hourly earnings continued to rise, but wage growth remained moderate. Average hourly earnings increased 3.0% over the year, according to the Bureau of Labor Statistics.The jobs report comes after the Federal Reserve raised its benchmark interest rate by 25 basis points last month to a range of 3.75%-4.00%, its first rate increase in three years. The weaker employment data has reduced expectations for another rate hike at the Fed’s October meeting.Economists have warned that higher energy costs, supply-chain disruptions and tariffs could put further pressure on employment later this year and into 2027. Diesel prices have risen sharply, while manufacturers have reported growing concerns over trade tensions.The report is also the last monthly employment reading before the November 3 US midterm elections, making the state of the labour market a key economic indicator ahead of the vote.Despite the weak hiring figure, the broader labour market does not yet show signs of widespread job losses. Reuters reported this week that initial unemployment claims were near a 57-year low, while corporate profits and domestic demand remained relatively resilient.
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