Flash Report: Unemployment Rises Slightly, Job Growth Slows in September
KEY TAKEAWAYS
- The U.S. unemployment rate rose from 4.1% in August to 4.2% in September, a value similar to its 12-month average. More precise data show the rate increased slightly from 4.141% to 4.175%.
- This very modest uptick was primarily driven by the combination of two offsetting forces: fewer unemployed people chose to stop looking for work and leave the labor force, and more unemployed people found jobs.
- Nonfarm payroll growth slowed in September to 29,000 jobs — less than half as many as forecasts expected.
Unemployment
September 2026
4.175%
Precise Rate
Unemployment changed little in September, despite the rise in the headline rate to 4.2%. (See the FRED chart above.) The more precise unemployment rate showed a much more modest increase. Additionally, the labor force participation rate and employment-to-population ratio both improved again in September, albeit slightly. The labor force participation rate rose 0.2 percentage points to 61.8% and the employment-to-population ratio rose 0.1 percentage points to 59.2%.
Total nonfarm payroll growth continued to be volatile from month to month. The economy added a less-than-anticipated 29,000 jobs in September as payroll gains in August and July were revised downward by a combined 60,000 jobs — or 30,000 each month, on average.
Taken together, however, these data suggest the labor market remained healthy in September from a historical perspective, with conditions similar to those in recent months.
Next, the analysis takes a deeper look at how estimated flows into and out of unemployment during September affected the overall unemployment rate.
DATA HIGHLIGHTS
- While the headline unemployment rate ticked up to 4.2% in September, the unrounded rate shows a smaller, 0.03 percentage point increase from August.
- More unemployed people deciding to keep seeking work instead of leaving the workforce and more unemployed people finding jobs were the main factors behind the overall change in the unemployment rate.
| 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 2026 | +0.03 | +0.85 | -1.09 | +1.11 | -0.82 |
| Last 3 Months | -0.00 | +0.83 | -1.03 | +1.11 | -0.91 |
| Last 12 Months | -0.04 | +0.89 | -1.06 | +1.11 | -0.98 |
| SOURCES: U.S. Bureau of Labor Statistics and St. Louis Fed Research staff’s calculations. | |||||
| NOTES: Average changes over the last 12 months exclude October and November, for which data were unavailable. Data are seasonally adjusted. The overall change is based on the precise unemployment rate for these periods; for example, the unemployment rates were 4.1754% in September and 4.1413% 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. | |||||
Compared with August, the 0.03 percentage point change in the unemployment rate was mostly due to the interplay between 1) lower-than-average transitions of unemployed people out of the labor force (e.g., discouraged workers), and 2) unemployed people finding jobs at a higher-than-average rate. The first pushes the unemployment rate up, while the second pushes it down. Other components of unemployment flows — people losing or leaving their jobs and people not in the labor force who began looking for work — were more in line with their recent averages. (See the table above.)
Citation
ldquoFlash Report: Unemployment Rises Slightly, Job Growth Slows in September,rdquo St. Louis Fed On the Economy, Oct. 2, 2026.
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