U.S. employers added just 29,000 jobs in September, far below the roughly 90,000 economists expected, while the unemployment rate rose to 4.2% and earlier payroll gains were revised down by a combined 60,000.

The new federal data, released Friday, sharpened evidence that hiring slowed as the economy entered the fourth quarter. The headline gain fell well short of the consensus in a Reuters survey, and the jobless rate increased from 4.1% in August. The result matters immediately because it is the last monthly employment report before the Nov. 3 midterm elections and arrives less than four weeks before the Federal Reserve’s next policy decision.

A broad loss of momentum

September’s weakness was not limited to a single industry. Health care added 17,000 jobs, about half its average monthly gain over the preceding year. Construction added 11,000 positions and manufacturing added 9,000, while financial activities lost 7,000. The official sector figures were also detailed in an AP analysis of the report.

The revisions made the slowdown more pronounced. July payrolls were changed from a gain of 21,000 to a loss of 10,000, while August was reduced from 162,000 to 133,000. Together, the changes removed 60,000 jobs from previously reported totals. Over the past 12 months, payroll growth has averaged 45,000 a month, the BLS said—a pace well below the hiring rates seen earlier in the expansion.

The labor force grew by about 485,000 people in September, helping lift the unemployment rate even as the number of employed people increased. The participation rate edged up to 61.8%, while the employment-to-population ratio held at 59.2%. Those figures help explain why unemployment rose without a corresponding wave of reported layoffs: more people were looking for work, and not all found it immediately.

Low hiring, but not mass layoffs

The report points to a labor market in which employers are adding fewer positions while largely retaining existing workers. Initial applications for unemployment benefits have remained near historically low levels, Reuters reported. Economists also cautioned that the unusually early Labor Day may have complicated seasonal adjustments, which could mean part of September’s 29,000 figure reflects calendar noise rather than a sudden break in demand.

Even so, measures of prolonged weakness worsened. The number of people unemployed for 27 weeks or longer reached 1.9 million, equal to 27.1% of all unemployed workers. Another 4.5 million people were working part time for economic reasons. Black unemployment rose to 7.0%, while the rate for adult men increased to 3.9%. These official measures suggest that the burden of slower hiring is uneven and that finding a new job has become harder for a growing share of workers.

Pay growth also cooled. Average hourly earnings rose 0.1% in September and 3.0% over the year, according to the AP report and the official release. Slower wage growth can ease inflation pressure, but it also limits how quickly household incomes recover from earlier price increases.

The Fed gains room to wait

The Federal Reserve raised its benchmark rate by a quarter point in September, to a target range of 3.75% to 4.00%, its first increase in three years. In its policy statement, the central bank said the decision was intended to support its dual mandate of maximum employment and stable prices.

Friday’s weaker hiring data reduced the urgency for another increase at the Fed’s Oct. 27–28 meeting. Interest-rate futures placed less than a one-in-five chance on an October hike after the report, down from more than one-in-four beforehand, according to a separate Reuters account. A December increase was still considered likely, underscoring that policymakers continue to balance cooling employment against persistent inflation risks.

Financial markets initially treated the report as a reason for patience. Shortly after the opening bell, the S&P 500 was up 0.9%, the Dow Jones Industrial Average had gained about 320 points and the Nasdaq composite was 1.3% higher. The 10-year Treasury yield fell to about 5.20%, an AP market update reported. A separate Reuters review likewise found that stocks gained and Treasury yields fell as investors marked down the odds of an immediate rate increase.

What comes next

The central question is whether September marks a lasting turn or a one-month distortion. The October employment report, due after the midterm elections, will show whether hiring rebounds once the calendar effects fade. Before then, the Fed will receive additional inflation and activity data that could determine whether the labor-market slowdown is strong enough to outweigh price pressures.

For now, the confirmed picture is one of sharply slower job creation rather than broad job destruction. But the combination of a 29,000 payroll gain, weaker revisions and longer unemployment spells materially changes the outlook: the labor market is no longer supplying the same cushion it provided earlier in the year, and both policymakers and voters will be judging whether that cooling remains orderly.