September payrolls likely to pick up

September 29, 2025

Payroll employment is expected to rise by 50,000 in September, well within the range to hold the unemployment rate steady at 4.3%. The breakeven for the unemployment rate dropped precipitously between 2024 and the back half of 2025. Last year, the unemployment rate held steady with employment gains of 155,000 per month. This year that breakeven has fallen to between 30,000 and 60,000 per month. The demand and supply of workers have fallen in tandem.

We could see the breakeven for unemployment move into negative territory next year. Yes, you read that correctly. A drop in the supply of workers via curbs on legal and illegal immigration could reduce the supply of workers such that we no longer need to generate jobs to hold unemployment steady. It is truly mindboggling.

Public sector gains will depend heavily upon how many workers state and local governments call back with the start of the new school year. September is the biggest month of the year for that hiring, which could fall short of historic norms given cuts to federal funding and the spillover effects. This is at the same time that state and local coffers are already strapped.

Federal employment is expected to add jobs, given the push to ramp up hiring by the Department of Homeland Security. News reports suggest that at least 10,000 new hires have already been made in September, which prompted the department to seek new office space. At least a portion of those hires was likely completed by the survey week for the month, which is the week of September 12^th.  

Private sector payroll gains are expected to remain concentrated in healthcare and social assistance, although the care economy is suffering worker shortages – it is an area where immigrants often fill jobs that native born will not. The Bureau of Labor Statistics just released an update on who is providing unpaid eldercare in 2023-24 (the last report covered 2021-22). The divide between men and women narrowed considerably.

What was previously a 60/40 split between women and men doing unpaid eldercare has shifted to a 55/45 split. Men 15-24 and those aged 25-54 now outnumber women in performing those jobs for the elder members of their families. The stress and disruption to those workers are rising as aging demographics dominate population shifts.

Hiring in the goods sector is expected to rebound a bit, with gains in vehicle production adding to manufacturing. Dealer lots have been drained as vehicle buyers scrambled to buy EVs ahead of the expiration of tax credits on October 1.

Construction employment is expected to remain muted. Home builders remain particularly sour on the outlook for new home construction despite a surge in new home sales in August. Most builders will not comment on the role immigration plays in their staffing decisions, but it is an area where wages have accelerated in recent months.

Average hourly earnings are expected to rise 0.3% in September. That translates to a 3.7% increase from a year ago, the same as in August. The bonuses paid to federal workers for homeland security purposes will show up in public sector gains and could amplify income gains in September.

The unemployment rate is expected to hold at 4.3%, while hours worked are expected to be unchanged. Participation in the labor force is expected to hold steady at 62.3%. Younger baby boomers are tapping their Social Security benefits early for fear of losing them, which has shown up as a boost to income gains in recent months.