The U.S. labor market gets its next major test on Friday, October 2, when the Bureau of Labor Statistics releases the September employment report at 8:30 a.m. ET — and the early signals point to a labor market that is cooling but not cracking.
The ADP National Employment Report, published Wednesday and jointly developed with the Stanford Digital Economy Lab, showed private employment rose by 90,000 jobs in September, up from a downwardly revised 36,000 in August. That beat the Reuters poll forecast of 70,000. The BLS’s own data on Tuesday showed 1.01 open jobs for every unemployed person in August, down slightly from 1.06 in July.
Economists expect Friday’s official report to show nonfarm payrolls rising by roughly 84,000–90,000 — a sharp deceleration from August’s 162,000 gain — with the unemployment rate holding at 4.1% for a third straight month and average hourly earnings up 0.3% on the month. A Conference Board survey on Tuesday did show consumers’ perceptions of the labor market deteriorating in September.
The report lands at a delicate moment for monetary policy. The Federal Reserve raised its benchmark rate by a quarter point to 3.75%–4% on September 16, its first increase since 2023, with Chair Kevin Warsh arguing inflation had been too high for too long. But Fed Vice Chair Philip Jefferson said Thursday he sees no urgency for another move. “Any future adjustments in policy should be determined by carefully examining trends in the data, the evolving outlook, and the balance of risks,” Jefferson said in remarks to the University of Virginia’s Darden School of Business. New York Fed President John Williams said Tuesday there was “no need to rush” after the September hike, though he still expected another increase before year-end.
Markets broadly expect the Fed to hold rates steady at its October 27–28 meeting, even as bond-market yields scream for more tightening.
Why it matters: Friday’s report is the swing variable — a hot payrolls number would push October hike odds back up and squeeze bonds, while a weak one would validate Jefferson’s patience and likely send yields and the dollar lower.
Sources:
https://www.reuters.com/business/us-private-payrolls-growth-picks-up-september-adp-says-2026-09-30/
https://www.reuters.com/business/fed-may-take-time-make-next-interest-rate-move-jefferson-says-2026-10-01/
