Employers across the U.S. added 29,000 jobs in September, below economists’ forecasts and signaling that some businesses are holding off on hiring amid headwinds such as surging energy prices and higher inflation. 

Economists had forecast the economy would add 90,000 new jobs last month, according to financial data firm FactSet. The unemployment rate stood at 4.2% in September, up slightly from 4.1% in the prior month.

Drop in layoffs

Recent data suggest the labor market has picked up since last year, when employers added an average of just 10,000 new jobs per month. Economists are closely watching other measures of labor market strength, such as wage growth, which has lagged inflation for five consecutive months.

Data released Thursday by outplacement firm Challenger, Gray & Christmas shows that job cuts have fallen sharply in 2026. Layoffs through September have declined 40% from the same period a year earlier, its report found. On a monthly basis, layoffs dropped 20% compared with September 2025, marking the lowest level in four years. 

A stable labor market gives the Federal Reserve more room to raise interest rates in the coming months, according to economists. The central bank is focused on driving inflation down to its 2% annual target and last month raised its benchmark interest rate for the first time in more than three years. 

In August, U.S. inflation rose at an annual rate of 3.4%, as soaring energy costs pushed up consumer prices. 

—This is breaking news and will be updated.