• U.S. employers added 119,000 jobs in September, more than double the consensus forecast of 50,000
  • Significant upward revisions to prior months add another 119,000 jobs, reversing earlier signs of labor market softening
  • The gains were heavily concentrated in in-person service industries and government, accounting for approximately 70% of total growth

Stronger Than Expected Labor Market Performance

The U.S. labor market demonstrated unexpected resilience in September as employers added 119,000 nonfarm payroll jobs, far surpassing economist expectations of 50,000 new positions. The robust performance was further bolstered by substantial revisions to prior months' data, with July and August payrolls combined revised upward by 119,000 jobs, according to the latest employment report.

Leisure and hospitality led the gains with 96,000 new jobs, while healthcare added 40,900 positions and social assistance contributed 25,000. Government hiring was particularly strong at 73,000 jobs, primarily at the state and local level. Professional and business services grew by 21,000 jobs, retail trade added 19,700, manufacturing increased by 17,000, and construction posted 11,000 new positions.

Sector Divergence and Underlying Trends

Despite the strong headline number, the labor market showed distinct sectoral weaknesses. Information services continued its decline with 5,000 job losses, extending a negative trend that began with tech layoffs in November. Temporary help services, often considered a leading indicator for broader hiring trends, declined by 4,200 jobs, potentially signaling future softness in the employment landscape.

Average hourly earnings increased 4.2 percent year-over-year in September, down slightly from 4.3 percent in August but remaining well above pre-pandemic levels. The unemployment rate held steady despite the strong job growth.

Immigration has played a crucial role in the labor market's recovery, with foreign-born workers accounting for the majority of job gains in several key sectors including retail trade (67 percent), financial services (68 percent), professional and business services (59 percent), and manufacturing (64 percent). Asian workers were particularly concentrated in these gains, according to people familiar with the demographic breakdown.

Economic Context and Future Outlook

Organizations continue to report widespread difficulties in finding qualified workers and retaining existing employees, suggesting persistent labor shortages despite the strong hiring numbers. The Bureau of Labor Statistics projects employment growth in the next decade will slow to nearly half of the previous decade's level due to slow growth in the working-age population, creating ongoing demographic headwinds.

While the September report indicates labor market resilience, economists note that the leisure and hospitality sector and government remain below February 2020 employment levels despite recent job gains, indicating they are still recovering from pandemic losses.

Correction: An earlier version of this article misstated the percentage of job gains accounted for by in-person service industries and government. The correct figure is approximately 70 percent.