The job market is cooling faster than many expected. Employers added just 29,000 jobs in September, the Labor Department said Friday, well short of the roughly 84,000 economists had forecast, CNBC reported. The unemployment rate rose to 4.2% from 4.1%.

The details were soft too. Private companies added 46,000 jobs, while government payrolls fell by 17,000, according to KPMG's analysis. Job gains for July and August were revised down by a combined 60,000. That means the economy had less hiring momentum this summer than first reported.

The report changed the outlook for interest rates. Before it came out, traders saw about a 70% chance the Federal Reserve would raise rates again at its October meeting. Afterward, those odds fell to about 23%, according to market data cited by analysts. Many traders still expect a hike by December, because inflation remains near 3%.

The Fed is in a tough spot. It wants to bring inflation back to 2%, but raising rates while hiring slows could push the economy toward a recession. Fed officials have said they will watch the data closely.

Here is the background. Hiring was strong after the pandemic, with employers adding hundreds of thousands of jobs a month in 2021 and 2022. Gains slowed through 2024 and 2025. This year, the war with Iran drove up energy prices, and higher borrowing costs have weighed on home building and other industries.

For workers, a softer market can mean fewer job openings and smaller raises. People looking for work may need more time to find it.

The next jobs report, for October, is due in early November, just after the midterm elections.

What we know: September added 29,000 jobs, and unemployment rose to 4.2%.
What we don't: Whether the slowdown will keep the Fed from raising rates again.