In the United States, the non-farm payroll increased by a modest 29,000 in September, significantly lower than market expectations. Based on inflation and non-farm employment data, the market predicts an 85% chance that the Federal Reserve will hold interest rates steady in October.
According to the latest employment situation report released by the Bureau of Labor Statistics (BLS) on October 2, 2026, non-farm payroll in the U.S. increased by only 29,000 in September, falling far short of market expectations, indicating a further slowdown in the job market.
The report showed that non-farm payrolls added 29,000 jobs, compared to an expected 89,000; the unemployment rate was reported at 4.2%, compared to an expected 4.1%; average weekly hours worked were reported at 34.4 hours, compared to an expected 34.3 hours; the annual wage growth rate was reported at 3.0%, compared to an expected 3.2%; and the monthly wage growth rate was reported at 0.1%, compared to an expected 0.3%.
Job growth in September was mainly seen in the healthcare and construction sectors, which added 17,000 and 11,000 positions respectively, while government positions decreased by 17,000. Average hourly wages only rose by 0.1% monthly and by 3.0% annually.
It’s worth noting that the report also revised down the non-farm payroll growth for July and August, with a combined 60,000 fewer jobs reported than previously, indicating weaker recent job growth momentum in the U.S. than initially estimated.
Following the release of the U.S. non-farm payroll data, U.S. stock index futures saw short-term gains, with Nasdaq 100 futures rising by 1.06%, Dow futures up by 0.85%, and S&P 500 futures up by 0.8%. Yields on U.S. 2-year to 7-year Treasury bonds all dropped at least 10 basis points intraday. The U.S. dollar index edged slightly lower following the job data release, down 0.1% to 101.86.
In light of inflation and non-farm payroll data, traders scaled back bets on a rate hike by the Federal Reserve in October, with federal funds rate futures indicating an 85% probability of the Fed standing pat.
Moreover, the recent U.S. core personal consumption expenditure (PCE) price index for August showed a year-on-year increase of 3%, falling short of market expectations. The core PCE price index for September will be released on October 29.
According to Reuters, Neel Kashkari, President of the Minneapolis Federal Reserve Bank, noted that even though the core PCE for August rose by 3%, lower than market expectations, it still exceeded the Fed’s 2% inflation target.
However, John Williams, President of the New York Federal Reserve Bank and Vice Chair of the Federal Open Market Committee (FOMC), hinted that with one rate hike already in September, it may be time to assess more data before proceeding with another hike, suggesting a potential delay in a further increase until later this year might be appropriate.
Goldman Sachs has pushed back the Fed’s next rate hike from October to December, citing the lower than expected August PCE index, and believes that “the FOMC is highly likely to conclude that there is no need for further rate hikes”.