October 2026 Labor Market Update

The U.S. job market remains in a low-hire, low-fire state. Economic uncertainty continues and companies remain cautious about making permanent hiring decisions. However, the job market is “uneven” in that some market segments are growing and some skills are in high demand. And, unemployment levels remain low.

The U.S. labor market showed signs of cooling in September. According to the U.S. Bureau of Labor Statistics’ September 2026 Employment Situation report, nonfarm payroll employment increased by 29,000, compared with a revised gain of 133,000 in August. The unemployment rate was little changed at 4.2%. July and August payroll estimates were revised downward, with July now showing a loss of 10,000 rather than the previously reported gain.

ADP’s September National Employment Report showed midsize employers accounted for most private-sector employment gains, unlike previous months when small or large businesses led the gains.

Despite slower overall hiring, demand for talent continues in growing industries such as healthcare, construction, and manufacturing. SHRM reports that finding qualified candidates remains challenging, with positions taking an average of 61 days to fill, extending to 68 days for healthcare roles and 77 days for engineering positions.

While hiring has slowed, layoffs have also declined. Challenger, Gray & Christmas reported that announced job cuts in September were down 18% from August and 20% from September 2025, while year-to-date layoffs declined 39% compared with the same period last year.

Despite, or perhaps because of the overall slower permanent employment growth, we continue to see strong demand among our clients for flexible staffing solutions, whether through contract professionals who help keep projects on track or contract-to-perm arrangements that allow companies to evaluate talent before making a permanent hiring decision.