September Nonfarm Payrolls Increase by 29,000, Lagging Expectations
By TopHolding Editorial · Thursday, October 1, 2026 at 8:00 PM
According to First Trust Portfolios economists Robert Stein and Brian S. Wesbury, September nonfarm payrolls increased by 29,000, falling short of consensus estimates. Despite soft headline figures, their analysis suggests the job market retains underlying health, driven by sectors like healthcare, construction, and manufacturing.
According to Robert Stein, Deputy Chief Economist, and Brian S. Wesbury, Chief Economist at First Trust Portfolios, nonfarm payrolls increased by 29,000 in September, significantly lagging the consensus expectation of a 90,000 gain. Payroll figures for July and August were revised downward by a combined 60,000, resulting in a net loss of 31,000 when accounting for revisions. Private sector payrolls saw a 46,000 increase in September, but prior months were revised down by 81,000. Wesbury and Stein note that average hourly earnings rose a modest 0.1% in September and are up 3.0% year-over-year, which they state is lagging consumer price inflation. These soft figures, the economists suggest, indicate the Federal Reserve may delay raising short-term interest rates until December.
However, First Trust's economists highlight several reasons to believe the job market remains robust. Civilian employment, an alternative measure that includes small-business startups, increased by 406,000 in September. Although the unemployment rate ticked up to 4.2% from 4.1% in August, Wesbury and Stein explain this was largely a rounding issue, with the precise rate barely moving from 4.141% to 4.175%. They also point to a positive trend in the labor force participation rate, which rose to 61.8% from 61.6% as the labor force expanded by 485,000. Notably, the unemployment rate for workers without high school degrees reached 4.3%, tying its lowest recorded level since 1992.
The report indicates that key sectors saw significant movement in September, with healthcare and social assistance adding 23,000 jobs and construction gaining 11,000. The information sector, conversely, shed 10,000 jobs. Manufacturing saw an increase of 9,000 jobs, while government employment declined by 17,000. Stein and Wesbury argue that the cumulative data defy "fears of an AI-related job apocalypse," noting that manufacturing and construction have shown significant improvement throughout 2026, which they relate to the expansion of data centers nationwide. They project that a shrinking government in the long term will lead to more private sector jobs.
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Key terms
1. Nonfarm payrolls: A measure of the number of paid employees in the U.S. economy, excluding farm workers and some government employees. It is a key indicator of job growth.
2. Unemployment rate: The percentage of the total labor force that is unemployed but actively seeking employment and willing to work.
3. Labor force participation rate: The percentage of the working-age population that is either employed or actively looking for employment.
Source: Robert Stein, CFA – Dep. Chief Economist and Brian S. Wesbury – Chief Economist, First Trust Portfolios — Data Watch. Read the original at ftportfolios.com.
