September jobs report due Friday: what to expect

• Payroll growth has averaged 80,000 monthly in 2026 but has been volatile, ranging from a loss of 156,000 jobs in February to growth of 214,000 in March
• Average hourly earnings are expected to show 3.1% year-over-year growth in September, down from around 4% at the start of the year, with Fed officials noting wages are not a significant inflation driver
• Markets have sharply reduced odds of a rate hike at the Oct. 27-28 Fed meeting following comments from officials like NY Fed President Williams that 'there is no need for urgency' on policy moves

September Jobs Report Preview: Market Expects Modest Growth

Key Expectations:

The Bureau of Labor Statistics will release September's nonfarm payrolls report Friday, October 2, at 8:30 a.m. ET. Wall Street consensus forecasts 84,000 jobs added with unemployment holding steady at 4.1%.

Labor Market Snapshot:

Payroll growth has averaged 80,000 monthly in 2026 but remains volatile, ranging from a 156,000 job loss in February to 214,000 gains in March. Despite modest top-line numbers, the unemployment rate near 4.1% indicates near-full employment conditions. Initial jobless claims recently fell to 197,000, while September layoffs dropped 18% from August and 20% year-over-year, according to Challenger, Gray & Christmas.

Wage Trends:

Average hourly earnings are expected to show 3.1% year-over-year growth in September, down from approximately 4% at year-start. Fed officials note wage pressures are not driving inflation, with no evidence of a wage-price spiral.

Federal Reserve Implications:

Fed officials, including Vice Chairman Philip Jefferson and New York Fed President John Williams, characterize the labor market as "stable" and "solid," with conditions recently strengthening marginally. This stability has shifted Fed focus toward inflation concerns rather than employment. Markets have sharply reduced expectations for a rate hike at the October 27-28 meeting, viewing December action as more likely.

Worker Sentiment Concerns:

Despite stable metrics, employee confidence hit record lows in September per job site data, marking the third such occurrence in 2026. Workers cite concerns about job security, economic uncertainty, inflation, and artificial intelligence impacts. Job openings are declining and hiring remains challenging, though layoffs stay suppressed.

The report will be critical in determining the Fed's near-term policy trajectory.