Flash Report: Unemployment and Payroll Both Rise in September
KEY TAKEAWAYS
- The U.S. unemployment rate ticked up to 4.4% in September from 4.3% in August. More precise data show the rate increased to 4.440% from 4.324%, respectively.
- More people entering the labor force to look for work primarily drove the rise in September’s reading.
- Despite the modest increase in the unemployment rate, relatively strong payroll gains in September suggest no alarming softening in the labor market.
Unemployment
September 2025
4.440%
Precise Rate
The modest rise in unemployment in September continued a gradual upward trend that began in June, when the unemployment rate came in at 4.1%. (See the FRED chart above.) The September reading stood 0.7 percentage points higher than the unemployment rate’s prepandemic monthly average in 2019, though the month’s level remains moderate by historical standards.
Employment growth rebounded in September, with the U.S. economy adding 119,000 jobs, after slowing sharply during the summer months. These mixed signals—an uptick in unemployment amid greater employment growth—merit careful monitoring of labor market conditions.
The following analysis focuses on how estimated flows into and out of unemployment during September affected the overall unemployment rate.
DATA HIGHLIGHTS
- While the headline unemployment rate rose to 4.4% in September, the unrounded rate shows a slightly larger increase from August of 0.12 percentage points.
- People joining the labor force outpaced job creation, thereby pushing the unemployment rate modestly higher.
| Average Monthly Change in Unemployment Rate (Percentage Points) |
People Losing or Leaving Their Jobs and Becoming Unemployed |
Unemployed People Finding Jobs |
People Previously Not in the Labor Force Who Are Now Seeking Work |
Unemployed Workers Leaving the Labor Force (e.g. Discouraged Workers) |
|
|---|---|---|---|---|---|
| September 2025 | +0.12 | +1.02 | -1.07 | +1.18 | -1.00 |
| Last 3 Months | +0.11 | +0.99 | -1.07 | +1.17 | -0.99 |
| Last 12 Months | +0.03 | +0.95 | -1.06 | +1.09 | -0.96 |
| SOURCES: Bureau of Labor Statistics and Research staff’s calculations. | |||||
| NOTES: Data are seasonally adjusted. The overall change is based on the precise unemployment rate for these periods; for example, the unemployment rates were 4.4398% in September and 4.3237% in August. The flow components into and out of unemployment add up to the change in unemployment with a negligible residual. See Maximiliano Dvorkin and Serdar Ozkan’s St. Louis Fed On the Economy blog post “The Recent Ins and Outs of Unemployment: Using Flows to Study Labor Market Dynamics” for more information about this method. | |||||
The number of people not in the labor force who began seeking work increased substantially in September, outpacing job creation and pushing unemployment higher. The labor force expanded by 470,000 workers, reflecting a 0.1 percentage point increase in the labor force participation rate to 62.4%. This pattern mirrors the May-August period, when anemic hiring coincided with modest unemployment increases as labor supply growth simultaneously slowed.
The modest rise in September’s unemployment stemmed primarily from people outside the labor force moving into unemployment (rather than directly into jobs). However, this component of flows into and out of unemployment remained within its typical range of month-to-month variation. Other components of unemployment flows tracked near their 12-month averages. (See the table above.)
Citation
ldquoFlash Report: Unemployment and Payroll Both Rise in September,rdquo St. Louis Fed On the Economy, Nov. 20, 2025.
This blog offers commentary, analysis and data from our economists and experts. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.
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