The latest US employment data has revived an increasingly familiar description of the US labour market: low hire, low fire.

It is an unusual combination. Employers are adding very few workers, but they are also not cutting existing staff at a pace typically associated with such weak hiring.

The result is a labour market that looks relatively stable on the surface, even as workers face fewer opportunities to find new jobs and businesses become more cautious about expanding.

US employers added just 29,000 nonfarm jobs in September, far below the 84,000 increase expected by economists in the Dow Jones consensus.

The unemployment rate rose to 4.2% from 4.1%, while labour force participation edged up to 61.8%.

The increase in unemployment was partly driven by more people entering the labour force.

About 485,000 additional people were looking for work, pushing participation higher from 61.6%.

The figures were also weaker than previously thought because of substantial downward revisions.

July payrolls were revised from a 21,000 increase to a 10,000 decline, while August growth was cut from 162,000 to 133,000.

Together, the revisions reduced payroll gains for those two months by 60,000.

“This is a disappointing jobs report and a reminder that the low-hire, low-fire labor market never went away,” said Olu Sonola, head of US economics at Fitch Ratings.

Job openings show employers are holding back

The latest Job Openings and Labor Turnover Survey, or JOLTS, offered another indication that employers are reluctant to expand their workforces.

The US economy had 7.1 million job openings in August, down slightly from a revised 7.3 million in July.

The job openings rate declined to 4.3% from 4.4%.

Hiring, however, remained steady at 5.2 million workers in August.

Layoffs were also stable at about 1.6 million workers, representing roughly 1% of employment.

Voluntary departures stood at 3.1 million, or 1.9% of the workforce.

A separate report from global outplacement firm Challenger, Gray & Christmas showed that planned layoffs by US-based employers fell 18% to 43,281 in September.

Announced job cuts were also 20% lower than a year earlier.

Employers have announced 573,195 layoffs so far this year, down 39% from the first nine months of 2025.

Planned job cuts also fell 43% in the third quarter.

Companies, however, remain cautious about expanding their workforces.

Hiring plans rose to 90,787 in September from just 12,325 in August, but were still 23% below a year earlier.

The September tally was also the lowest for the month since 2011.

What does low hire, low fire actually mean?

A conventional slowing economy often produces a familiar sequence: companies stop hiring, demand weakens further and businesses eventually begin laying off workers.

The current US labour market has so far avoided that second stage.

Hiring has slowed considerably, but layoffs have remained relatively contained.

That means workers who already have jobs are, in many cases, holding on to them, while people outside the workforce or looking to change jobs are finding fewer openings.

US Bank estimates that from January 2025 through August 2026, employers added an average of just 40,000 jobs a month, compared with more than 200,000 a month during the previous three years.

Yet unemployment has remained relatively low, at or below 4.5% since late 2021.

That divergence is at the heart of the low-hire, low-fire phenomenon.

“It’s a lack of job increases rather than an outright occurrence of job reductions,” said Lia Taniguchi, head of research at recruitment service Bullhorn.

One of the clearest signs of this shift in hiring trends has been slower payroll growth.

Average hourly earnings edged up 0.1% after rising 0.3% in August.

That lowered the annual increase in wages to 3.0% from 3.1% in August.

Why are employers not laying off aggressively?

Various categories of data have come together to show that businesses are not aggressively dismantling their workforces.

Instead, they appear to be managing staffing levels cautiously, replacing some workers where necessary while avoiding broad-based expansion.

“Businesses learned that mass layoffs can be expensive to reverse,” said Matt Schoeppner, senior economist at US Bank.

“Instead, many are adjusting at the margins through hiring freezes, attrition and slower workforce expansion.”

That behaviour is particularly important because companies experienced severe labour shortages after the pandemic.

Rebuilding workforces proved difficult and costly, giving employers an incentive to retain workers even when demand softens.

Why companies are reluctant to hire

Several forces are contributing to the cautious approach.

Tariffs and broader policy uncertainty have raised costs for some companies and made it harder to plan investments and staffing requirements.

Goods-producing industries have been particularly exposed.

Government spending reductions have also led to layoff announcements in some areas while weighing on confidence among federal contractors and related businesses.

Consumer demand is another constraint.

Lower- and middle-income households continue to face affordability pressures, limiting discretionary spending and reducing the incentive for some consumer-facing companies to add employees.

Artificial intelligence is adding another layer of uncertainty.

Companies are increasingly adopting AI tools that can allow existing employees to handle more work, potentially reducing the need to expand payrolls.

The effect may be particularly visible in some entry-level technology positions, where companies are reassessing staffing requirements.

At the same time, the AI buildout is creating demand for workers in areas such as data centres, infrastructure and advanced manufacturing.

The gains, however, have not been evenly distributed across the broader economy.

Workers are feeling the squeeze

The low-fire side of the equation may make headline unemployment appear relatively contained, but that does not necessarily mean the labour market feels healthy to people searching for work.

“The labor market is stable, but it’s not picking up. It’s soft,” said Claudia Sahm, a former Federal Reserve analyst and chief economist at New Century Advisors, according to The New York Times.

“The labor market is OK, it’s just who you are in the labor market that matters, and more than usual.”

Chieh Huang, chief executive of Pelago, a company that provides career advice to laid-off employees, said the phrase “that we are in a low-fire, low-hire environment” has merit, but warned of anxiety beneath the headline numbers.

“There’s just so much uncertainty in general,” he said.

“And then so much uncertainty of what A.I. can do in the future so that when you talk to job seekers, like we do constantly, they are finding that hey, it takes a little bit longer these days to find your next gig,” he said in the NYT report.

For workers who lose jobs, the problem can therefore extend beyond the unemployment rate.

Some are searching for positions offering comparable pay and seniority, while others may accept lower-paying work because they cannot afford a prolonged period without income.

Long-term unemployment has also been rising, rather than falling as would normally be expected during an economic expansion.

An unusual balance that cannot last forever

The current arrangement has provided a degree of stability.

Companies are keeping existing workers while limiting expansion, preventing a sharper deterioration in unemployment.

But the same dynamic can make the labour market increasingly difficult for people trying to enter it, switch jobs or recover from layoffs.

“The big picture is that it’s all really mixed,” Sahm said.

“Low hiring rates are usually paired with high firing rates, so to have this low hiring and low firing all at once — and for this long — is just, well, odd.”

That unusual balance is the defining feature of the current US labour market.

“Looking ahead, the key question is whether this low-churn equilibrium can persist. As long as layoffs remain contained, the labor market appears capable of maintaining steady footing. However, subdued hiring and limited worker mobility suggest that future labor market performance may depend less on robust job creation and more on the continued absence of meaningful workforce reductions,” US Bank said.

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