Nonfarm payrolls grew by an average of 220,000 jobs per month in Q3 2025, slightly slower than Q2 but still notably above forecasters' expectations. The headline strength masked a substantial concentration: healthcare and government together accounted for 64% of net job gains across the quarter, with private-sector hiring outside those two areas slowing meaningfully.
Healthcare added 192,000 jobs in the quarter, the strongest three-month gain since the immediate post-pandemic rebound. Hospitals contributed 71,000, ambulatory care services 78,000, and nursing and residential care facilities 43,000. Demand drivers included the continued aging of the U.S. population, the buildout of outpatient and ambulatory networks by major hospital systems, and ongoing recovery from staffing shortfalls that emerged during 2020–2022.
Government employment grew by 134,000, with state and local accounting for 122,000 and federal accounting for 12,000. Public education was the standout, as school districts continued to backfill teaching, custodial, and administrative roles that had been left vacant during the pandemic. State and local fiscal positions remained healthy, with rainy-day funds at multi-decade highs in many states.
Outside of healthcare and government, the picture was more mixed. Construction added 38,000, supported by strong single-family homebuilding. Leisure and hospitality added 51,000, with food services and drinking places leading. Professional and business services added just 48,000, with employment services (temp help) actually declining for the third straight quarter.
The goods-producing sector continued to lag. Manufacturing added 4,000 jobs across the quarter — essentially flat. Mining and logging was unchanged. Retail trade added 18,000, with gains concentrated at warehouse clubs and online retailers. Transportation and warehousing was flat, reflecting both freight recession dynamics and continued automation in distribution centers.
Wages grew 4.1% year over year by September, with the Atlanta Fed wage tracker showing a similar pace. Wage growth was concentrated in lower-wage industries, where labor markets remained relatively tight, while wage growth in tech, finance, and consulting decelerated more sharply.
The unemployment rate ticked up from 4.0% to 4.1% across the quarter, primarily reflecting an increase in labor force participation rather than job losses. Labor force participation among prime-age workers reached 83.7%, the highest since the early 2000s. Female prime-age participation hit a record 76.0%.
Q3 marked an inflection point in how analysts and policymakers talked about the labor market. By the end of the quarter, the dominant framing had shifted from 'tight' to 'rebalancing,' and discussions of when the Federal Reserve would begin cutting rates had become considerably more concrete. The data trends established in Q3 — strong but concentrated job growth, normalizing wage gains, and modest increases in slack — have largely persisted into early 2026.