The U.S. Bureau of Labor Statistics will release its September non-farm payrolls report on Friday (October 2). Market consensus expects 90,000 new jobs, lower than the initial estimate of 162,000 in early August; the unemployment rate is expected to remain unchanged at 4.1%. The Chicago Fed's real-time model shows a projected September unemployment rate of 4.10%, a slight decrease from August's 4.14%, with the hiring rate expected to rise from 44.85% to 45.81%, and the layoff rate remaining at a low of 2.03%.

Predicting non-farm payrolls is like "flipping a coin," but the trend is more important than a single month's number.

Olu Sonola, head of U.S. economic research at Fitch Ratings, bluntly stated that predicting non-farm payroll data is "sometimes like flipping a coin," even jokingly suggesting that "maybe everyone should give up predicting this report." While economists are still running models to estimate the numbers, the sheer volume of noise in single-month data makes trend analysis more important than precise predictions. Sonola prefers to look at trends rather than single-month fluctuations, especially with the ADP National Employment Report. He points out that with ADP monthly data, "you never know what will happen," but the direction is positive, and sometimes the ADP trend leads the Bureau of Labor Statistics data. The September ADP report showed 90,000 new jobs added in the private sector, meaning "we are still creating jobs." While the actual numbers may not be precise, the trend is still upward.

"Fragile Stability" of Low Hiring and Low Layoffs: Maintaining Balance Amid Weak Supply and Demand

Fitch's Sonola describes the labor market as "fragilely stable" because "it doesn't take many factors to topple it." Two years ago, the U.S. economy routinely added more than 100,000 jobs per month, but in recent months, wage growth has averaged less than 100,000 per month. The average monthly increase over the past three months was about 72,000. While demand has weakened, supply-side growth has stagnated due to demographic trends and a sharp decline in immigration, keeping the labor market in balance. JOLTS data reinforces the narrative of "low hiring, low layoffs." Sonola points out that the number of job openings is roughly "moving sideways," and says that "JOLTS is almost always boring," adding that he hasn't spent much time paying attention to the report recently. This suggests that there haven't been any drastic changes on either the supply or demand side of the labor market.

Labor force participation rate is a concern, with a particularly noticeable decline in male participation rate.

The labor force participation rate is a worrying concern. The participation rate in August was 61.6%, higher than July's 61.4%, but lower than the 62.3% a year ago. More alarmingly, the participation rate for men aged 20 and over is projected to decline by more than one percentage point from 69.8% in August 2025 to 68.4% in August 2026. This trend reflects structural pressures on the labor supply side, compounded by an aging population and declining immigration.

Chicago Fed model: Hiring rate rebounds slightly, layoff rate remains low

The Chicago Federal Reserve's real-time labor market indicator model shows that the unemployment rate is projected to be 4.10% in September, a slight decrease from 4.14% in August. The hiring rate is expected to rise to 45.81% in September from 44.85% in August, while the layoff rate is expected to remain low at 2.03%, slightly lower than 2.04% in August. This model points to a slightly improving but still low-level labor market—hiring activity is marginally recovering, but layoffs have not increased significantly, and the overall market remains in a "stable" range.

The divergence between soft data and alternative data: September non-farm payrolls may be significantly higher than the consensus.

Not all analyses point to mild data. SA analyst Damir Tokic believes that, based on high-frequency, soft, and alternative data, September's non-farm payrolls may significantly exceed consensus expectations. A strong upward surprise could push up interest rate expectations, impacting stocks and bonds. This view contrasts with general market expectations and reminds traders that the unexpected nature of a single month's data should not be ignored.

Summarize

The key takeaways from the September non-farm payrolls report are: a consensus expectation of 90,000 new jobs and an unemployment rate remaining flat at 4.1%. However, the noise surrounding single-month data makes trend judgment more important than precise forecasting. Fitch's Sonola describes the labor market as "fragilely stable"—low hiring, low layoffs, and a balance maintained by weak supply and demand, but not easily overturned. The decline in the labor force participation rate, especially the significant drop in the male participation rate, is a structural concern on the labor supply side. The Chicago Fed model shows a slight rebound in hiring and a low layoff rate, pointing to a slightly improved but still low-level market condition. Amid the divergence between soft and alternative data, some argue that the September non-farm payrolls may be significantly higher than the consensus, which would push up interest rate expectations and put pressure on stocks and bonds. Overall, this report is more likely to confirm the "low hiring, low layoffs" labor market picture than to provide a decisive signal for a change in policy direction.