U.S. job growth defied expectations in September, according to a Labor Department report issued nearly seven weeks late due to the government shutdown.
Payrolls rose by a seasonally adjusted 119,000 on the month, the strongest gain since April, the Labor Department said Thursday.
That was well above the gain of 50,000 jobs that economists polled by The Wall Street Journal expected to see. The September report covers the month before the recent government shutdown began on Oct. 1.
However, August’s payrolls number was revised to a loss of 4,000 jobs, and July’s payroll numbers were revised slightly lower to a 72,000 gain. That meant employment in July and August combined was 33,000 lower than previously reported.
The unemployment rate, which is based on a separate survey from the jobs figures, rose slightly to 4.4%, reaching the highest level in four years as nearly half a million people joined the labor force. Economists expected the unemployment rate to hold at 4.3%.
Stocks rose sharply on Thursday. Investors were already responding enthusiastically before the employment report to Nvidia’s strong earnings report late Wednesday, but the jobs figures added fuel to the rally. Separately, the Labor Department released updated weekly jobless claims that suggest layoffs didn’t rise sharply during the government shutdown, which ended last week. In the week through Nov. 15, 220,000 people newly filed for jobless benefits—broadly in line with the range that held for most of 2025.
But the report also showed that the number of continuing unemployment claims, a measure of the size of the unemployed population, rose by 28,000 to 1,974,000 in the week ended Nov. 8. That was the highest level since November 2021 and reflects a low-hire environment where it has been difficult for those workers who are laid off to find work again.
The latest data will likely do little to resolve the debate at the Federal Reserve, where some policymakers, wary of inflation, want to leave rates on hold, while others are pushing for a rate cut in December as insurance against a labor-market deterioration. Hawks can point to the bump up in job growth as a reason to postpone any further easing, while doves can focus on the rise in the unemployment rate, as well as the general trend toward weaker job growth, as reasons to cut. Thursday’s report was the last official snapshot the Fed will see before the next rate-setting meeting in December. As a result of the shutdown, the Labor Department pushed back its release of the November jobs report to Dec. 16, the week after the rate decision. It will also release some October jobs data on that day.
“There’s no sign of a rapid deterioration in the American labor market that warrants a rate cut out of the Federal Reserve,” said Joseph Brusuelas, chief economist at RSM. Thursday’s data point to “sustained modest growth in the economy and employment,” he added.
Interest-rate futures implied the odds of a quarter-point cut at the December meeting stood at about 40% following Thursday’s report, up from about 30% earlier.
In September, employers added jobs at a steady clip in retail, construction, healthcare, leisure and hospitality, and government. They let go of workers in transportation and warehousing, and temporary help services. Those are often the industries that pull back on hiring first in a slowdown as households and businesses rein in spending.
Though greatly delayed—these numbers were initially scheduled for release on Oct. 3—the September report offered the first official look since before the shutdown at the state of a critical economic marker for investors and policymakers. The Fed, for instance, uses the job report to help it make decisions about interest rates.
While the federal data are incomplete, there are other signs that the labor market remains unsettled. Major companies, including Amazon.com and Target, recently announced they were cutting thousands of corporate jobs.
Meantime, consumer sentiment dropped in early November on concerns about the shutdown’s negative economic impact, according to a survey by the University of Michigan. More than 70% of households said they expect unemployment to increase over the next year.
A survey from the National Federation of Independent Business found small-business optimism also declined slightly in October. Owners reported lower sales and reduced profits, NFIB said, and many firms said they were having difficulty finding labor.
The third quarter was largely strong for company earnings—Nvidia reported record sales and strong guidance Wednesday, helping soothe jitters about an artificial-intelligence bubble. But some companies cautioned that consumers are increasingly bifurcated, with high-income households spending strongly while younger and lower-income consumers are under strain.
Earlier this week, Home Depot reported lower third-quarter profit and trimmed its full-year outlook, as economic uncertainty, high interest rates, and a stagnant housing market prompted homeowners to scale back home improvements.
“Our customers tell us that they remain on the sidelines due to uncertainty and perhaps the hesitation to make larger financial commitments amid an uncertain economic environment,” Chief Financial Officer Richard McPhail said Tuesday.
Target on Wednesday trimmed its profit guidance for this year, saying fewer shoppers visited its stores in the third quarter and those who did spent less. The quarter was volatile because of several external factors, such as the pause in federal food-assistance benefits funding and the government shutdown, according to incoming Chief Executive Michael Fiddelke.
While job growth surprised to the upside today with the release of the September jobs report, the labor market continues to trend downwards.
Looking at the data:
• Altogether, nonfarm payroll employment grew by 0.5% annualized in the three months ending September, and employment was up 0.8% year-over-year. The three-month growth rate had dipped to 0.2% as of July and August, so the September data did drive a bit of improvement.
• Factoring in the likely impact of the coming benchmark revisions, we’d estimate payroll employment growth was just 0.3% in the three months ending September, and 0.4% in year-over-year terms. This marks a significantly weaker-than-normal job market. Compared to nonfarm payroll employment growth of 1.3% in 2024, or the 1.5% average in the pre-pandemic period of 2017-19.
• Most industries are seeing flat or declining employment, except healthcare. In the last six months, total employment expanded by 378,000 jobs in the “healthcare and social assistance” category (15% of total employment), while all other employment declined by 28,000. Corporate cost-cutting (perhaps enabled partly by AI) is taking a toll. In the last three months, employment has declined at a 2% annual rate in the management and administration category, as well as 1.8% in information industries.
It's still unclear to what extent decelerating job growth is being driven by falling labor demand versus labor supply. The Fed would seek to ease monetary policy only insofar as falling labor demand is outpacing the fall in labor supply, meaning that slack is building in the labor market. The unemployment rate did tick up to 4.4% in September, up from an average of 4.1% in the first quarter of 2025, suggesting that slack is increasing.
Given that today’s numbers were not a bad as feared, in conjunction with recent hawkish statements from the Fed, it does appear that the Fed will skip a cut in December. But with the negative trend in labor markets remaining in place, we’d expect the Fed to resume cutting in their next meeting in January 2026, if they don’t cut this December.
Walmart delivered another standout quarter, posting strong sales and profits that blew past Wall Street expectations as it wins over a broad base of shoppers, including cash-strapped Americans and the well-heeled, who have grown increasingly anxious about the economy.
While other retailers dial back projections, the nation’s largest retailer raised its financial outlook Thursday after its strong third quarter, setting itself up for a strong holiday shopping season.
Walmart Inc., based in Bentonville, Arkansas, also said Thursday that it will be transferring the listing of its common stock to the tech-heavy Nasdaq from the New York Stock Exchange. It expects its common stock to begin trading on the Nasdaq Global Select Market on Dec. 9, under the same ticker symbol “WMT.”
CEO Doug McMillon, who surprised investors last week with plans to retire early next year, has reshaped Walmart itself as a tech-powered retail giant that has leaned heavily into automation and artificial intelligence.
McMillon spearheaded a period of robust sales growth since becoming chief executive in 2014, going toe-to-toe with online behemoth Amazon. John Furner, 51, the head of Walmart’s U.S. operations, will take over on Feb. 1, the day after McMillon’s retirement becomes effective.
The leadership change arrives at a challenging time for U.S. companies that have spent months navigating an uncertain economic environment as President Donald Trump imposes wide-ranging tariffs on imports and pursues an immigration crackdown that threatens to shrink the number of workers available in America.
Walmart’s performance serves as a barometer of consumer spending given its size and vast customer base. The company maintains that 90% of U.S. households rely on Walmart for a range of products, and more than 150 million customers shop on its website or in its stores every week.
“We’re gaining market share, improving delivery speed, and managing inventory well,” McMillon said in prepared remarks. “We’re well-positioned for a strong finish to the year and beyond that.”
Comparable sales at U.S. Walmart stores — those from sales from established physical stores and online channels — rose 4.5% in the third quarter, just shy of last quarter’s 4.6%.
Walmart said it’s gaining market share across all income cohorts, with the biggest increases coming from households with annual income over $100,000.
Walmart Chief Financial Officer John David Rainey told The Associated Press during a phone call Thursday that spending from middle-income shoppers remained steady, but there was a pullback from lower-income shoppers in the back half of the quarter. The lapse in benefits from the Supplemental Nutrition Assistance Program because of the government shutdown was a drag on business, but sales rebounded, he said.
“There’s always a difference between how the upper income performs versus the lower income,” he said. ”But that gap has widened more recently, where you can see that low-income consumers are stretching their dollars. They’re not buying some of the discretionary things.”
In response, the company has ramped up the number of rollbacks — temporary price discounts — to 7,000.
Meanwhile, other retailers have reported mixed results.
Target’s third-quarter profit tumbled as the retailer struggled to lure shoppers who are being pressed by stubbornly high inflation. The Minneapolis company said Wednesday that it expects its sales slump to extend through the critical holiday shopping season.
Home Depot, which reported its third-quarter results on Tuesday, was mixed with fewer violent storms reaching shore, more anxiety among U.S. consumers, and a housing market that is in a deep funk. The company lowered its fiscal 2025 adjusted earnings forecast but raised its expectations for sales growth.
TJX, which operates HomeGoods and TJ Maxx, upgraded its full-year outlook and turned in higher profit and sales during the recent quarter as it continues to lure shoppers looking for deals on trendy items.
At Walmart, third-quarter profits rose to $6.14 billion, or 77 cents per share, in the quarter ended Oct. 31. Adjusted earnings were 66 cents, or 6 cents better than Wall Street had expected, according to a poll by FactSet. That is far greater than the $4.58 billion, or 57 cents per share, the company earned in the same period last year.
Sales rose nearly 6% to $179.5 billion, also exceeding the expectations of most analysts.
Global e-commerce sales rose 27%. That follows a 25% jump in the second quarter and 22% growth in the first quarter.
Walmart said that it’s been able to manage higher costs from Trump’s tariffs by changing the mix of products and absorbing some of the costs. The company said prices on Walmart goods on average rose 1.3% for the latest quarter. That’s higher than overall inflation, which rose 3% in September,
Prices for items like electronics, toys, and seasonal items rose the most, roughly increasing in the high single digits, Walmart said.
The company said that it now expects adjusted profits this year to be in the range of $2.58 to $2.63 per share, up from guidance in August of between $2.52 and $2.62 per share.
Walmart expects sales for the year to be up anywhere from 4.8% to 5.1%. That’s up from an earlier estimated range of 3.75% to 4.75%.
Analysts were predicting $2.61 per share, according to FactSet analysts.
Walmart’s shares rose $6.23, or more than 6%, to $106.85 in late-morning trading.