U.S. job growth likely improved slightly in September, while the unemployment rate stayed near a four-year high of 4.3%. This level reflects a labor market that continues to weaken, with both employers and workers showing reduced demand and supply.
The Labor Department’s employment report, which will be released on Thursday, is backward-looking. However, it is expected to confirm the slowdown seen throughout the year. Analysts have pointed to several sharp downward revisions to nonfarm payroll data as evidence that the labor market has lost momentum.
The report was delayed due to a 43-day government shutdown, the longest in U.S. history. Because the Bureau of Labor Statistics could not collect household survey data during that period, the agency also cancelled the October jobs report. Instead, October figures will be combined with November’s report, now scheduled for December 16. Before the data blackout, the BLS estimated that job creation from March back through the previous 12 months had been overstated by roughly 911,000 positions.
According to economists, the trend remains weak. “The labor market is clearly slowing and that direction is likely to continue,” said Sung Won Sohn of Loyola Marymount University. He added that the U.S. is unlikely to fall into recession but may face a period of very limited job growth.
A Reuters survey showed that nonfarm payrolls likely rose by about 50,000 jobs in September. This would exceed the 22,000 positions added in August, a month often distorted by seasonal factors. Many analysts expect that August will eventually be revised higher, following typical historical patterns.
Lower immigration levels have also reduced the supply of available workers. The decline began during President Joe Biden’s final year and accelerated under the administration of President Donald Trump. Economists now estimate that the U.S. labor market needs only 30,000 to 50,000 new jobs per month to match population growth—far fewer than the roughly 150,000 monthly requirement seen in 2024.
Although the unemployment rate increased in August, it has mostly held between 4.1% and 4.2% throughout the year. Stephen Stanley of Santander U.S. Capital Markets said the slower job growth reflects a shift in labor supply rather than major weakness in overall labor conditions.
AI Is Reducing Entry-Level Opportunities
Growing adoption of artificial intelligence is also affecting hiring. Economists report that AI is cutting demand for entry-level roles, leaving many recent college graduates struggling to find work. This has supported a pattern of jobless economic growth.
Other analysts point to trade policy uncertainty created during the Trump administration. Businesses—especially smaller firms—have reportedly held back on hiring because of shifting tariff rules. This month, the U.S. Supreme Court reviewed legal challenges to Trump’s import duties, with several justices questioning his authority to impose tariffs under the 1977 International Emergency Economic Powers Act.
Despite overall payroll growth, certain industries continue to shed jobs. “Small and medium-sized enterprises have suffered the most significant losses,” said Brian Bethune of Boston College, calling the current landscape “a highly polarized economy.”
Fed Policy Could Still Be Influenced
Some economists believe the September report may still influence the Federal Reserve’s December 9–10 policy meeting—especially if data shows a weakening labor market. Federal Reserve officials will not have access to November’s employment figures at that meeting, as the release has been moved to December 16.
Minutes from the Fed’s late-October meeting showed that many policymakers were concerned that additional rate cuts could undermine efforts to control inflation. “The Fed is cautious about cutting further,” said Martha Gimbel of Yale’s Budget Lab. She added that only a significantly weak report would likely shift their stance.
