September Jobs Report Confirms a Weakening U.S. Labor Market. Black Unemployment Increases From 6.0% to 7.0%.
The Bureau of Labor Statistics reported that total nonfarm payroll employment increased by only 29,000 jobs in September, while the unemployment rate edged up to 4.2 percent. Employment in every major industry was essentially unchanged.
That is an extremely weak payroll number.
Even more important, BLS revised previously reported employment sharply downward. July payroll growth was revised from +21,000 to -10,000, while August was revised from +162,000 to +133,000. Together, July and August employment was 60,000 jobs lower than previously reported.
This is particularly noteworthy because after the August report we warned that the initially reported 162,000 payroll increase might be revised downward. That has now occurred.
Black Unemployment Jumps to 7.0 Percent
The most troubling number in the September report is the sharp deterioration in Black employment. The Black unemployment rate increased to 7.0 percent, compared with:
3.6 percent for White workers
4.7 percent for Hispanic workers
2.9 percent for Asian workers
Black workers tend to experience labor-market deterioration earlier and more severely than the national average. The September numbers suggest that economic weakness is increasingly affecting communities that are already more vulnerable to job losses and reduced income.
Black women continue to experience the sharpest deterioration in the labor market. The unemployment rate for Black women age 20 and over rose from 5.6% in August to 6.8% in September, even as more Black women entered the labor force. The increase therefore reflects not only job weakness, but also the economy’s failure to generate enough employment opportunities to absorb Black women who were actively seeking work. This is particularly concerning because Black women often serve as important income earners and economic anchors for their households and communities. A sustained rise in unemployment among Black women would have broader consequences for household income, consumer spending, credit quality, and the operating environment for Black-owned businesses.
The 7.0% Black unemployment rate should not be described simply as a collapse in Black employment. September produced three simultaneous developments:
1. Black labor-force participation surged.
2. Black employment increased modestly.
3. The labor force grew far faster than employment, producing a sharp rise in unemployment.
That suggests the economy is not generating enough jobs to absorb Black workers who want to work.
Private-Sector Hiring Is Barely Moving
The industry data provide little evidence of broad economic momentum.
Health care added just 17,000 jobs, roughly half its average monthly gain over the previous year. Construction added 11,000 and manufacturing added 9,000, while financial activities lost 7,000 jobs. Most other major sectors—including retail, wholesale trade, transportation, professional and business services, leisure and hospitality, and government—showed little change.
Financial services deserve particular attention. Employment in the sector is now down 129,000 jobs since May 2025, including substantial losses among insurance carriers and related businesses.
Wage Growth Is Also Cooling
Average hourly earnings increased just 0.1 percent in September and were up 3.0 percent over the past 12 months. Slower wage growth may eventually reduce inflation pressure, but combined with weak hiring it also points to declining labor demand.
For Black and minority-owned businesses, weaker employment and wage growth can mean slower consumer spending precisely when many firms are already dealing with high borrowing costs, elevated operating expenses, reduced government contracting opportunities, and continued uncertainty.
The Revisions Matter
Perhaps the most important lesson from this report concerns the reliability of initial payroll estimates.
When the August report was released, the headline increase of 162,000 jobs appeared to suggest that the labor market had suddenly strengthened. We questioned that conclusion and specifically warned that the number could be revised downward.
It has now been revised to 133,000. July has also moved from an initially positive number to an outright employment decline.
Many have suggested that the Bureau of Labor Statistics is manipulating the numbers to please the executive branch. We do not know, but this is a reasonable question given the uniquely incompetent nature of this administration. Monthly payroll statistics are estimates and are routinely revised as additional employer information becomes available.
But these revisions do reinforce our view that policymakers, investors, and the media should exercise considerably more caution before treating preliminary monthly payroll estimates as definitive evidence about economic conditions.
Our Assessment
The September report is not simply a weak employment report. Taken together with the downward revisions to July and August, it suggests that the labor market has been losing momentum for several months. Three numbers summarize the problem:
September payroll growth: +29,000
September Black unemployment: 7.0 percent
Downward revisions to July and August: -60,000 jobs
The headline national unemployment rate of 4.2 percent still appears low by historical standards. But underneath that figure, the labor market is becoming increasingly uneven. For Black workers and Black and minority-owned businesses, the warning signs are already visible. The question now is not whether the labor market has weakened.
The September report indicates that it has. The more important question is how much further the slowdown will go—and how much today's employment estimates will ultimately be revised.