September’s jobs surge upends forecasts, casting doubt on near-term Fed cuts
The United States labor market delivered a surprise jolt in September, with employers adding 119,000 jobs—far outpacing analyst expectations and temporarily quelling fears of a hiring slowdown.
The robust data, released six weeks late due to a historic federal shutdown, rattled markets and raised further questions over whether the Federal Reserve will cut interest rates in December.
Employers added far more jobs than expected in September, reversing the summer’s slowdown in hiring.
The Bureau of Labor Statistics (BLS) also revised August’s job creation sharply downward, from a modest 22,000 gain to a loss of 4,000 jobs.
The unemployment rate edged up to 4.4%, the highest since October 2021, with the number of jobless individuals climbing to 7.6 million from 6.9 million a year earlier.
The report, initially scheduled for early October, was postponed by the 43-day government shutdown—the longest on record—leaving investors and policymakers flying blind for weeks.
The federal government reopened Thursday after a record 43-day shutdown, with President Trump signing a stopgap bill that will fund operations through January 30.https://t.co/8wl5pbkQm9
— Mortgage Professional America Magazine (@MPAMagazineUS) November 13, 2025
Market reaction was swift. The CME FedWatch Tool showed traders slashing bets on a December rate cut, with odds of no change rising to 66%.
But Mortgage Bankers Association (MBA) senior vice president and chief economist Mike Fratantoni still sees a cut ahead despite the September surprise.
He said the report "aligns with other data showing a somewhat softer labor market, but not one that is rapidly declining in strength," and indicated he expects a further 25-basis-point reduction by the central bank in December even though some Fed members may dissent.
And First American senior economist Sam Williamson said the path ahead for the central bank remained "murky" because of the jump in the unemployment rate and "mixed message" signals on how the jobs market is faring.
The Fed has given no indication that a cut is a surefire bet. Minutes from its last decision revealed that plenty of decisionmakers oppose a December rate reduction.
“A further reduction of the policy rate in December is not a foregone conclusion—in fact, far from it,” Fed chair Jerome Powell said at a recent press conference, emphasizing the central bank’s delicate balancing act between curbing inflation and supporting employment.
AI and trade policy reshape the jobs landscape
Hiring concentrated in limited sectors. Health care added 43,000 jobs, with ambulatory services contributing 23,000 and hospitals 16,000.
Food services gained 37,000, while social assistance rose 14,000. Transportation and warehousing shed 25,000 positions, with warehousing and storage accounting for 11,000 of those losses.
Federal government employment continued its decline, falling 3,000 and marking a 97,000-job loss since peaking in January.
Despite the headline job gains, deeper currents are reshaping the labor market. The rising adoption of artificial intelligence is eroding demand for entry-level roles, locking out recent graduates and fueling what some economists call “jobless economic growth.”
Meanwhile, ongoing trade policy uncertainty, particularly around tariffs imposed under the Trump administration, has hamstrung business hiring, especially among small firms.
The US Supreme Court recently heard arguments on the legality of these duties, with justices expressing skepticism about executive authority over tariffs.
Shutdown fallout and data gaps cloud outlook
The September report’s delay was not the only disruption. The BLS confirmed it will not release a full jobs report for October, citing lost capacity during the shutdown.
Instead, October and November data will be combined in a December release, leaving policymakers and markets with less information as they weigh their next moves.
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