September New Jobs Expected to Drop to 90,000: Tonight’s Real “Bombshell” in Nonfarm Payrolls May Be Whether August Data Is Significantly Revised Down

The US September Non-farm Payrolls report will be released on Friday (October 2), marking the final employment data before the Federal Reserve’s meeting on October 28. However, market pricing of its impact has dropped to recent lows—history shows that when the market cares least, data often causes the biggest stir.

Wall Street’s median expectation is for a net gain of 90,000 jobs, a sharp drop from August’s 162,000. The market is highly focused on whether August data will be severely revised down, as atypical seasonal adjustments have previously exaggerated overall employment performance. This leaves September data facing significant uncertainties from the base effect.

Meanwhile, Federal Reserve policy expectations have shifted dramatically in the past week: On Monday, the probability of an October rate hike was about 70%, but after New York Fed President Williams stated he is "in no rush to raise rates," and with August core PCE data being mild, the probability dropped to around 25% by Thursday’s close. Goldman Sachs has pushed its next rate hike expectation to December.

Seasonal adjustment is the biggest source of uncertainty in this report. Barclays estimates that if August data were re-adjusted using this year’s seasonal factors, the “robust” gain of 162,000 would flip to a decline of 74,000, suggesting August data is heavily overestimated. Thus, whether August figures are revised down will directly determine the interpretation of September's numbers.

For the market, the real risk may not be in the short-end rates, but in longer-dated bonds. Goldman Sachs data shows CTA trend-following funds are currently holding around $390 billion in global bond shorts; US 10-year Treasury short positioning sits at a record 99% and 30-year at a full 100%. If payrolls data is weak or the unemployment rate climbs to 4.2%, system funds could trigger massive short covering, leading to dramatic bond market swings.

Expectations: Consensus Skews Low, with Significant Divergence

Eighty Wall Street institutions predict a range from +50,000 (Barclays) to +130,000 (Nomura). Almost all forecasts are below the August print, with most below consensus.

Core forecast data is as follows:

Non-farm payrolls: +90,000 (previous +162,000); 3-month average 71,000, 6-month average 107,000, 12-month average 50,000

Private payrolls: +81,000 (previous +127,000)

Unemployment rate: 4.1% (previous 4.14%, unrounded)

Labor force participation rate: 61.6% (unchanged)

Average hourly earnings: MoM +0.3%, YoY +3.2% (previous +3.1%)

Average weekly hours: 34.3 hours (previous 34.4 hours)

Goldman Sachs expects payroll growth of +80,000, slightly below consensus but above the three-month average, and has lowered its unemployment rate forecast to 4.0% due to declining initial jobless claims. Goldman also forecasts average hourly earnings up just +0.2% MoM, citing “unfavorable calendar effects.”

Nomura is at +130,000, the highest on Wall Street, reasoning that August’s initial readings are historically the most prone to upward revisions.

Unemployment & Wages: Details Dictate Market Response

The unemployment rate forecast ranges from 4.0% to 4.2%, with the divergence stemming from the unrounded 4.14% in August.

• Goldman Sachs and Nomura expect 4.0%, based on declining continuing claims;

• Wolfe Research expects 4.17%, which rounds to 4.2%;

• Bank of America expects 4.1%, but warns of a post-surge reversal risk after household survey employment jumped by 569,000 in August, possibly pushing the rate to 4.2%. They add “even 4.2% remains consistent with healthy labor market fundamentals”;

• Deutsche Bank warns that even a slight uptick in labor force participation could round the unemployment rate up to 4.2%.

On wages, Goldman Sachs and Nomura both forecast +0.2% MoM, while Deutsche Bank is above consensus at +0.4%. Goldman’s broader wage tracker shows YoY +3.5%, annualized +3.1% in Q3. Wolfe Research points out, wage growth remains “below the Federal Reserve’s preferred 3.5%-4.0% range,” calling it “surprisingly benign.”

Seasonal Adjustment: August “Swelling,” September Brings Two-way Risk

Seasonal factors are the central interpretive challenge in this report.

Wolfe Research notes that in a typical August, seasonal adjustment usually lowers the post-adjustment number by over 100,000. But this August, seasonal factors actually pushed the number higher—a first since 2021.

Bank of America economist Shruti Mishra provides the clearest explanation:

The unadjusted job gain in August was actually lower than last year’s, but this year’s seasonal adjustment was “near zero”; in August 2025, the adjustment will be -178,000, so nearly all of this year’s unadjusted gain flowed into the seasonally adjusted figure.

Bank of America links this anomaly to differences in survey periods—August 2026 has a four-week survey window, while 2024 and 2025 both have five weeks.

Barclays' conclusion forms a clear logic chain:

If August data is revised down → September data could surprise on the upside; If August is not revised down → September may come in weak.

Bank of America urges investors “not to be misled by the headline number,” keeping underlying job growth estimates at a healthy “100,000+.”

Additionally, Bank of America highlights a potential downside risk: About 200,000 Haitian TPS holders lost work authorization on July 27, mainly in food service, health, transport, and retail. BofA’s baseline scenario is a gradual drag, but admits “the hit to the September number could be greater than expected.”

High-Frequency Labor Market Indicators: Overall Positive, Consumer Confidence an Outlier

Multiple high-frequency indicators show continued labor market resilience:

Initial jobless claims: Survey reference week at 198,000, below August’s 207,000; continuing claims fell to 1.719 million, the lowest since March 2023, supporting a 4.0% unemployment rate forecast

ADP: Private payrolls +90,000 (estimated 70,000, previous 36,000), first acceleration since May, led by education/health and leisure/hospitality sectors

Revelio: September +56,900, above revised August’s +40,600, led by public admin, healthcare, construction

Challenger layoffs: 43,000 announced in September, the lowest since 2022, but hiring plans are the lowest for the same period since 2011

PMI: S&P Global flash PMI shows the fastest job growth since June 2022; ISM manufacturing employment rose to 52.7

The only counter-signal comes from the consumer confidence survey. The Conference Board’s survey shows the gap between “jobs plentiful” and “jobs hard to get” narrowing to just +1.7, and six-month job outlook dropping to -14.4, implying consumers feel the job market continues to soften.

Federal Reserve Policy: The Path from “Skipping” to “Hiking”

After the first rate hike in three years, the Fed’s dot plot median signals one more hike by 2026. The market briefly priced this for October, but quickly retreated.

Market consensus has now shifted to “skip October, hike in December.” Goldman Sachs economists believe—with core PCE expected at 3.0% by year-end (below the Fed’s 3.4% forecast)—“FOMC could conclude no further hikes are necessary.”

Barclays similarly expects a pause in October, hike in December. Deutsche Bank’s baseline scenario is hikes in December and again in March next year.

Bank of America, citing recent remarks by Waller on labor market resilience, believes this report is “unlikely to be a game-changer for October hike pricing, with CPI data set to draw more attention.”

Bond Market Shorts: The Biggest Potential Flashpoint

Options markets have drastically compressed pricing for this report. According to Goldman Sachs derivatives team, S&P 500 same-day straddle implied volatility dropped from Monday’s 1.18% to about 67-70bp on Thursday, below the past eight-day average of 72bp. Nasdaq 100 straddles are around 95bp.

In forex markets, USD/JPY implied vol hovers at 42bp and EUR/USD at about 38bp, near the upper bound of one-year realized volatility—FX is currently the only market still paying for event risk surprises.

Goldman’s Rich Privorotsky notes real pressure lies in the long end, not the short end:

“Rates: there are zero buyers in the long end. PCE surprised soft, but barely moved the long end... The real issue is the long end doesn’t care at all.”

This makes positioning risk the most important variable to watch. Goldman’s Brian Garrett notes their CTA models show system funds hold about $390 billion global bond shorts, US 10-year Treasury shorts are at a record 99%, and 30-year positions are at 100%.

1. If data comes “just right” (40,000-100,000 jobs added, 4.0%-4.1% unemployment), both stocks and bonds will moderately rise;

2. If data is “too hot” (120,000+ jobs and unemployment at 4.0%), October hike expectations swiftly re-enter the market;

3. If data is “too cold” (job gains below 20,000 or unemployment above 4.2%), not only will hike bets vanish, but a massive CTA bond short squeeze erupts.

As for equities, Goldman’s Nelson Armbrust notes the S&P 500 is just 2% off its historical high, “any rate reprieve could spark a rally.” JP Morgan’s Andrew Tyler signals a “mirror image” risk: Strong ADP could mean non-farm payrolls surprises to the upside, triggering a market logic where ‘good news is bad news’.

It is also notable that the scale of the August revision could have more market impact than September’s actual headline. If August is sharply revised down, it confirms that seasonal adjustments distorted true employment trends, which could reshape the market’s view of the entire jobs cycle.

The market is highly focused on whether August data is subject to a significant downward revision, as abnormal seasonal adjustments have previously exaggerated overall job performance, creating huge baseline uncertainties for the September report.