The labor force rose, after shedding 2.1 million people in 8 months amid the crackdown on illegal immigration and the wave of retirements.
By Wolf Richter for WOLF STREET.
Overall payrolls of nonfarm employers rose by 29,000 in September from August (blue columns in the chart), to a record 159.04 million, as governments at all levels shed 17,000 jobs, mostly at local governments, and private-sector employers added 46,000 jobs.
The revisions are yoyoing in both directions: This time, the prior two months were revised down (August by -29,000 and July by -31,000). In the report a month ago, the prior two months had been revised up (July by +44,000 and June by +11,000). This data on nonfarm payrolls, released by the Bureau of Labor Statistics today, is based on surveys of employers.
The six-month average gain of total nonfarm payrolls, which irons out some of the month-to-month squiggles and includes the revisions, at 66,000 jobs, were a step-down from the August six-month average that had been the highest since June 2024 (red line).
Private-sector payrolls rose by 46,000 workers, to a record 135.72 million.
The six-month average job gain of 67,000 jobs was also a stepdown from the August gain of 93,000 jobs, which had been the highest since June 2024.
This job growth is occurring despite the labor force having declined by roughly 2 million people from the peak in 2025 as a result of the crackdown on illegal immigration and the continued wave of boomer retirements.
By category of private-sector employers.
Three major private-sector industries shed jobs:
- Financial activities, includes real estate (-7,000)
- Information (-10,000).
- Professional and business services (-9,000).
The other major private-sector industries gained jobs:
- Healthcare (+23,000);
- Construction (+11,000);
- Leisure and hospitality (+10,000);
- Manufacturing (+9,000);
- Transportation & warehousing (+8,000);
- Other services (+6,000).
- Retail trade (+6,000).
- Wholesale trade (+5,000);
- Arts, entertainment, recreation: (+3,000).
- Utilities (+500)
The level of total nonfarm employment rose to a record 159.04 million in September.
There was a clear flat spot from April 2025 through February 2026, when nonfarm payrolls essentially didn’t change, as private-sector employers continued hiring but on a slow pace, while the federal and state governments shed jobs.
The federal government has shed 328,000 jobs since January 2025 as the Trump administration was cleaning house, and state governments have shed 53,000 jobs as their large public university systems experienced declining enrollment including by the big money-maker, foreign students.
Average hourly earnings rose by 0.13% in September from August, and by 3.0% year-over-year, to $37.81 per hour.
Inflation has been running hot for months, with CPI rising by 3.4% in August, and more in prior months, and wage gains have been lagging slightly behind the rate of CPI inflation since April, after outrunning CPI inflation over the past three years through March 2026.
The three-month average, which irons out some of the big month-to-month swings and the huge adjustments, rose by 301,000 in September from August, the first increase this year, after having dropped by 2.07 million in the prior eight months.
The labor force consists of people who are working and people who are not working but are actively looking for work. When a person decides to retire, they exit the labor force. The data is collected via surveys of households.
The drop in the labor force since the end of 2025 resulted from the crackdown on illegal immigration and boomer retirements.
The data on the labor force is collected via surveys of households (the above nonfarm payrolls data was collected via surveys of employers).
The decline in the labor force – a decline in the supply of labor – has changed the dynamics of the labor market, leading among other things to a low unemployment rate, despite so-so job creation.
The unemployment rate inched up to 4.18%, from 4.14% in the prior month, a historically low rate within a 50-year timeframe.
The unemployment rate reflects the number of unemployed people who are actively looking for a job (7.11 million) divided by the labor force (170.3 million). This data is from the BLS survey sent to households.
The prime-age labor force participation rate rose to 83.7% in September, the highest since May (blue in the chart below). The three-month average rose to 83.5% (red).
This range that has prevailed since mid-2024 is the highest in over 20 years.
The prime-age labor force consists of people between 25 and 54 years old. It eliminates the issue of the retiring boomers. When people retire and stop looking for a job, they’re no longer “participating” in the labor force but remain in the population until they die. It’s the surge of boomer retirements over the past 15 years that has pushed down the overall labor force participation rate (not shown here), but not the prime-age labor force participation rate.
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Looks like the “buy the dip” crowd for the long bonds are being more cautious today. I see nothing in the numbers above that is screaming “must lower rates” to the FED.
Correct, no rate cut data here. Today’s jobs data does not oppose a rate hike in December.
And the Fed is not going to hike before the midterms. I don’t think that ever happened. They’re going to sit tight during the midterms, and then they do what they think they should do.
This is wild. We have never before seen the prime age (25-54) employment to population ratio stay constant for this long. Typically it’s either growing (during booms) or shrinking (during recessions), but it has now been constant at about 81% for almost 4 years straight.
The closest previous example was 1997-2001, the only time in history with a higher percentage of employed 25-54 year olds.