Layoffs decline in September, yet weak hiring keeps NFP in focus

Employers in the US cut 43,281 jobs in September, an 18% drop from August and a 20% decline year-on-year. The total was the lowest for a September since 2022, when 29,989 jobs were eliminated. The technology sector again accounted for the largest share of layoffs, with 10,799 positions eliminated last month, representing a 77% surge from August.

Over the first nine months of 2026, total announced job cuts are 39% lower than in the same period of 2025. This looks reassuring on the surface.

Hiring data tells a different story, according to the latest Challenger report. Employers stated they intended to hire 90,787 workers in September, 23% fewer than a year earlier and the smallest September total since 2011.

More significantly, Challenger observed that the customary early bump in seasonal hiring for the holidays has not appeared this year.

This raises the stakes for Friday's non-farm payrolls (NFP) release. Analyst projections indicate payrolls are anticipated to increase by roughly 90,000 in September, with the jobless rate staying at 4.1%. The data arrives on the heels of yesterday's ADP report, which revealed that private sector payrolls climbed by 90,000, exceeding the 70,000 that had been expected.

As a note of caution, neither the ADP figures nor the Challenger data serve as a direct proxy for the NFP report. Combined, however, they imply that businesses are being cautious rather than slashing jobs aggressively.

With bond yields rising and already unsettling wider markets, the market's response on Friday to the employment data could be severe. The yield on the 10-year Treasury is poised for a firm break above 5.30% today, pushed by inflation, energy costs, and fiscal worries that keep bond vigilantes firmly in control.

A robust NFP reading could give bond sellers fresh grounds to drive yields higher and maintain the squeeze on equities. Conversely, a muted figure might provide Treasuries with some temporary reprieve. However, given that long-dated maturities face headwinds far beyond the labour market, it might require a genuinely weak report to alter the narrative in the bond market, and, consequently for broader financial markets.