Jobs Huge Miss: Sept Payrolls Plunge To 29K, Below All Estimates As July Revised Negative… But Employment Soars

In our jobs preview post, we told readers to “beware a bond squeeze as august seasonals reverse” and boy were we right: yields are tumbling from 5.22% to 5.16%, a new weekly low, as all those record TSY shorts get bigly squeezed following what was a big miss in the September jobs print which tumbled from a downward revised August (as we said it would be) 133K vs 162K originally to just 29K.

It wasn’t just August that was revised down by 29,000, from +162,000 to +133,000: July was also revised down by 31,000, from +21,000 to  -10,000.  This means that the original negative print of -23K, and which was revised up to 31K last month, is now once again negative and that had the Fed known this, it most likely would not have hiked last month. With  these revisions, employment in July and August combined is 60,000 lower than previously reported. 

More notably, the 29K job print was below all estimates, which is amusing since August was originally above all estimates, but has since been revised sharply lower and just in line.

While the headline payrolls print was a big miss, the unemployment rate actually rose to 4.2%, from 4.1%, and above estimates of an unchanged print, as the number of unemployed workers rose to 7.109MM from 7.031MM, up 78K, while the labor force rose by 485K to 170.262MM. Among the major worker groups, the unemployment rate for people who are Black (7.0 percent) jumped in September. The jobless rates for adult men (3.9 percent), adult women (3.6 percent),  teenagers (14.5 percent), and people who are White (3.6 percent), Asian (2.9 percent), or Hispanic  (4.7 percent) showed little change over the month.

As for the specific reason why the unemp rate rose despite the drop in payrolls, that’s because the Household Survey showed a 406K surge in the number of employed workers, the second highest since Jan 2025 (only August’s 569K was higher)…

… which pushed the total number of employed workers to 163.152MM, the highest since January.

It’s also why the participation rate has jumped sharply in the past two months after dropping to a 5 year low in July.

There was some more relief on the inflation front as average hourly earnings rose just 0.1%, below the 0.3% expected, which pulled the annual wage growth to just 3.0%, down from 3.1% and below estimates of an unchanged print.In September, average hourly earnings of private-sector production and  nonsupervisory employees rose by 7 cents, or 0.2 percent, to $32.60. 

The average workweek for all employees on private nonfarm payrolls remained at 34.4 hours in September. In manufacturing, the average workweek was unchanged at 40.6 hours, and overtime held at  3.0 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.8 hours. 

Taking a closer look at the numbers in the report, we find the following:

• The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged  at 1.9 million in September. The long-term unemployed accounted for 27.1 percent of all unemployed  people. 
• Both the labor force participation rate, at 61.8 percent, and the employment-population ratio, at  59.2 percent, changed little in September. These measures showed little net change since January.  
• The number of people employed part time for economic reasons changed little at 4.5 million in  September. These individuals would have preferred full-time employment but were working part time  because their hours had been reduced or they were unable to find full-time jobs. 
• In September, the number of people not in the labor force who currently want a job changed little  at 5.8 million. These individuals were not counted as unemployed because they were not actively  looking for work during the 4 weeks preceding the survey or were unavailable to take a job. 
• Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force decreased by 236,000 to 1.5 million in September. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, changed little over the  month at 414,000. 

Next, looking at the actual industries in today’s report, we find the following: 

• Health care employment continued its upward trend in September (+17,000), but at a slower pace than the average monthly gain over the prior 12 months (+33,000). In September, employment continued to trend up in ambulatory health care services (+13,000) and in hospitals (+12,000), while nursing and  residential care facilities lost jobs (-9,000).
• Employment in construction changed little in September (+11,000). The industry had added an average of 10,000 jobs per month over the prior 12 months. In September, employment in nonresidential  specialty trade contractors continued to trend up (+12,000).
• Manufacturing employment was little changed in September (+9,000) but is up by 72,000 since a recent low in December 2025. Over the month, employment increased in plastics and rubber products manufacturing (+5,000) and in machinery manufacturing (+5,000).
• In September, financial activities employment was little changed (-7,000). Employment in financial activities is down by 129,000 since a recent peak in May 2025, with most of the job loss in insurance carriers and related activities (-90,000).
• Employment also showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; wholesale trade; retail trade; transportation and warehousing; information; professional and business services; social assistance; leisure and  hospitality; other services; and government.

And visually:

There were no major surprises below the surface, as part-time jobs rose by 205K to 28.746MM while full-time jobs rose by 88K to 134.376MM.

Finally, looking at the breakdown in native vs foreign-born, there were no surprises here too, as the number of US born workers rose by 298K while foreign-born workers surged by 473K, on other words, back to the old normal.

Overall, this was a mixed report, with the Household Survey painting a much stronger picture than Establishment (hence unemployment rate higher). But since the market – and by extension the Fed – are mostly swayed by the Payrolls part of the equation, it is not surprising that the market reaction today is one where bonds are getting massively short squeezed after the payroll print which missed all estimates.