U.S. job growth expected to slow in September after August surge

The U.S. economy is expected to have added 90,000 jobs in September, a slowdown from a surge the previous month, with the unemployment rate forecast to remain at 4.1% for a third straight month.

The anticipated moderation follows a jump of 162,000 nonfarm payrolls in August, which some economists attributed to volatility in the government's seasonal adjustment models.

"I am expecting a reaffirmation of the 'low-hire, low-fire' American labor market," said Joe Brusuelas, chief economist at RSM.

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"At this point, we're at full employment, and I think there will be nothing in the jobs report that will cause the Federal Reserve to change its bias from one more hike this year."

The U.S. Labor Department's Bureau of Labor Statistics will publish its employment report on Friday.

Economists in a Reuters survey predicted the September increase, with estimates ranging from 35,000 to 180,000 jobs.

They also expected August's job count, which was the largest in five months, to be revised down.

"We suspect that the seasonally adjusted August nonfarm payroll print will be revised down as the BLS extends its seasonal adjustment procedure forward to incorporate the September data," said Marc Giannoni, chief US economist at Barclays.

"The seasonal adjustment significantly exaggerated that month's employment gain. Had the August nonfarm payroll employment been adjusted with the August 2025 seasonal factors, it would have registered a drop of 74,000 jobs."

Economists said there were no signs yet that the U.S.-Israel war with Iran was disrupting the labour market, but they expected headwinds from the conflict to start having an impact by year's end.

Robust corporate profit growth and resilient domestic demand are for now shielding workers from layoffs, with hiring at a modest level.

"There's just too many negative things playing out in terms of problems with fuel prices, uncertainty over the political outlook and trade policies," said Brian Bethune, an economics professor at Boston College.

"I wouldn't be surprised if employment hits the wall next month."

Employment growth is expected to moderate in the leisure and hospitality industry and local government education after large gains in August.

Another month of strong increases is forecast for construction payrolls, partly driven by the building of data centres to support AI technology.

A fourth straight month of double-digit employment gains is expected for the manufacturing sector, also in part related to the infrastructure buildout for artificial intelligence.

Economists also said it was unclear when the termination of Temporary Protected Status for hundreds of thousands of Haitian immigrants would show up in the data.

"Our base case is that this will likely play out gradually over a period of months as a mild headwind to payroll growth rather than as a one-time shock," said Shruti Mishra, an economist at Bank of America Securities.

Together with worker retirements and the Trump administration's immigration crackdown, this has reduced labour supply, helping to keep a lid on the unemployment rate.

The economy needs to create between 50,000 and 80,000 jobs per month to keep up with growth in the working-age population, economists estimated.

Economists said a low jobless rate should not be mistaken for a tight labour market, adding that the focus should be on wage growth.

Wages are forecast to have increased 3.2% on a year-over-year basis in September after rising 3.1% in August.

Average hourly earnings are projected to have increased 0.3% from the previous month.

"An unemployment rate that falls because of lower participation due to demographic forces is not necessarily a tightening labor market that is generating upward pressure on wages," said Veronica Clark, an economist at Citigroup.

The U.S. central bank last month raised its benchmark overnight interest rate by 25 basis points to the 3.75%-4.00% range, the first hike in three years, and flagged further increases ahead.

The odds of another rate hike this month were diminished by cooler-than-expected inflation readings for August and July.

Financial markets are pricing in a roughly 28% chance of further monetary policy tightening at the U.S. central bank's Oct. 27-28 meeting, down from about 69% a week ago, CME Group's FedWatch tool showed.

With files from The Globe and Mail