Employers had a respectable hiring month in September, ending a weak summer on a positive note and easing some concerns that the job market had slipped into contraction.
But the data wasn't clearly positive: The unemployment rate rose slightly to 4.4 percent, suggesting more people were looking for work and not finding one.
Delayed by six weeks due to the government shutdown, the report paints an already outdated picture of a labor market that has faltered amid federal layoffs and unpredictable wage policies. The Labor Department is expected to release figures for October and November next month, after the Federal Reserve next meets to consider a rate cut.
The mixed signals from the September report, which is also inconsistent with some private sector indicators, could only further cloud the situation.
“We go into the next session without a clear sign of the direction of the labor market,” said Michael Reid, U.S. economist at RBC Capital Markets. “There was a lot of fog; this report does not help that situation at all.”
The economy added 119,000 jobs in September, more than double what forecasters expected and well above the average of 71,000 jobs for the rest of 2025. Numbers for the previous two months were revised down slightly, wiping out the 33,000 job gains from July and August, making September look more like an acceleration.
However, the strength was not widespread.
As in the last two years, employment growth was largely driven by the healthcare sector, which created 43,000 new jobs. Bars and restaurants added 37,000, an indication of high spending on hospitality services.
Both sectors are tied to an aging economy that has recently been driven by higher-income consumers spending freely on discretionary services, while those at the lower end of the income spectrum struggle to keep up with their bills.
The part of the economy tied to goods was much weaker. Transportation and warehousing lost 25,000 jobs, possibly reflecting a decline in imports that began in the summer with the imposition of tariffs. Manufacturing, which has been declining since the beginning of 2023, lost 6,000 jobs; Surveys of manufacturing companies indicate a continued decline. 16,000 jobs were lost due to temporary employment services; This sector is smaller today than it has been since 2012.
And as President Trump continues his austerity measures, the federal government has cut 97,000 jobs since January. The October figure is expected to be very low or even negative, reflecting the fact that another 100,000 federal employees were laid off from federal service at the end of September.
While overall layoffs have remained relatively low, high-profile announcements from companies like UPS and Amazon in recent weeks could be a sign that things are changing. As measured by job search website Indeed, job vacancies are at their lowest level in four years.
“Having 90 percent of your jobs come from just two industries is a troubling problem. We need a variety of different jobs to keep an economy going,” said Cory Stahle, an economist at Indeed. “It's easy to say, 'Look, the economy is solid,' but that doesn't apply to the types of workers who have been laid off in the last month or so.”
The increase in unemployment was due to both layoffs and people who started looking for work and were unsuccessful. The share of people either working or looking for work has increased, largely due to women in their prime working years approaching the record high labor force participation rate they set last year.
But this job market was difficult for people early in their careers because employers had more candidates to choose from. The unemployment rate for workers between the ages of 20 and 24 is 9.2 percent, the highest level since 2015. Across all age groups, the number of part-time workers who would rather work full-time is increasing.
This is the reality Siarra Gbakima faces. After graduating from Temple University in 2022, she landed an internship and a fellowship, but never the steady, permanent job in social justice and human rights advocacy that she was hoping for.
After leaving her last position, Ms. Gbakima went back to school to obtain a master's degree in communications. She also works a few shifts a week as a barista in Philadelphia and is looking for a job with more hours and higher pay.
“I'm in a strange limbo that I think a lot of people my age are in,” said Ms. Gbakima, 25. “You're stuck in a place where you have experience and you're trainable, but you don't have enough experience and entry-level jobs don't really exist anymore.”
Despite the rise in unemployment, wages continued to rise strongly, increasing by 3.8 percent compared to the previous year. This metric is also unevenly distributed: Workers at the lower end of the income spectrum saw slower wage increases than people who earn more. The average hourly wage has been growing faster than inflation since May 2023, but as wage growth slows, the gap is narrowing.
A major factor lurking beneath the surface of the employment data is the Trump administration's aggressive immigration enforcement, with virtually no one crossing U.S. borders without a visa. Employment in some sectors with high densities of illegal immigrants, such as housing and child care, has declined this year.
Meanwhile, the White House guidelines are also impacting legal immigration channels, such as the H-1B skilled worker visa, which now carries a $100,000 fee.
Nancy Clark runs a small advertising firm in northern New Hampshire. She plans to hire another graphic designer after the New Year if she gets more reassurance from her clients. This time, she said, she will hire domestically, even though she has previously found top talent in other countries – it is now much more expensive to both recruit and retain them.
“I simply cannot afford to hire another designer for an H-1B, regardless of whether they are the right person or not,” Ms. Clark said.
The biggest impact of the immigration crackdown may be yet to come. The number of foreign-born workers has declined since March, according to Labor Department surveys, and yet there are still nearly four million more immigrants in the United States than there were at the start of the pandemic in 2020.