Jobs report hides an investment signal advisors shouldn't ignore

The September jobs report gave investors a weak headline number. Strategists say the more useful information for financial advisors sits underneath it.

Total nonfarm payroll employment changed little in September (+29,000), according to the Bureau of Labor Statistics report released Oct. 2, 2026. That was below the 90,000 jobs economists had expected. Three investment strategists who spoke with InvestmentNews argue that the total matters less than two other questions. Which industries are still competing for workers? And are companies backing that hiring with capital? Those answers can tell advisors more about durable economic momentum than the monthly payroll figure.

The makeup of last month's report shows why. Construction employment rose by 11,000, and nonresidential specialty trade contractors added 12,000 jobs. Manufacturing added 9,000 jobs, healthcare added 17,000, and financial activities contracted by 7,000. The unemployment rate ticked up to 4.2% from 4.1%, average hourly earnings were up 3.0% from a year earlier, and aggregate hours were unchanged for the month. 

Why the jobs report's composition matters more than the headline

Scott Helfstein, head of investment strategy at New York-based Global X ETFs, said the headline figure tells him how much employment is growing. The industry mix shows what is driving that growth and how widely it is shared. In his view, hiring concentrated in healthcare and social services can reflect structural demand rather than an accelerating economy. Stronger hiring in hospitality and recreation, by contrast, may point to resilient consumer spending, with implications for discretionary companies' revenue and earnings.

"The key is to assess those industry trends alongside wages, hours worked, and spending data. A healthy headline can mask narrow hiring, while broader gains can offer stronger evidence of economic momentum," Helfstein said.

Nancy DeRusso, head of client solutions at Guardian in New York, made a similar point. A 150,000 payroll gain could mean one industry hiring hard while everything else shrinks. It could also mean steady hiring almost everywhere. Those are very different economies that look identical on paper, she said.

"When we look at how many industries are actually adding people, we can find that data in the diffusion index, which is published by the government and covers about 250 industries. If fewer than half are growing, the job market is narrower than the headline suggests. That usually shows up in corporate earnings too," DeRusso said.

The diffusion index measures the share of industries that are increasing employment. A reading above 50 means more industries are adding jobs than cutting them.

DeRusso noted that much of the recent growth in healthcare, education and government jobs is funded by demographics and tax dollars, not by companies deciding to expand. "The problem for investment purposes is that you mostly can't own them, as hospitals and school districts aren't public companies. So strong hiring there tells you very little about the stocks your clients actually hold," she said.

AI infrastructure is showing up in hiring data

Helfstein said persistent demand for workers can show where companies are still investing. Because monthly reports are volatile, he gives more weight to trends that hold across several releases.

"Nonresidential construction, including projects tied to the AI buildout, has been an important driver of private investment, and construction employment has increased since March. The manufacturing sector also added jobs over the past three months as production output has accelerated. Together, these trends suggest continued investment momentum in parts of the industrial sector, though hiring is best assessed alongside other economic data," he said.

Marta Norton, chief investment strategist at Empower in Greenwood Village, Colorado, sees hiring as an early sketch of the economy that a technological transition may produce. The AI buildout should favor construction and manufacturing jobs, she said. Meanwhile, AI-driven efficiencies could reduce hiring needs in white-collar fields such as technology and financial services. That question has shaped the debate over jobs data throughout 2026.

"Assuming causation between economic data and an overarching narrative is dangerous. And it is probably too early to attribute weaker white-collar hiring to AI. Nevertheless, we have seen these trends take shape in the labor data – not just in the most recent print, but over a longer period. Construction has continued to add jobs, while manufacturing employment has risen from its late-2025 low. On the flip side, employment in information and financial activities has trended lower," Norton said.

Norton pointed to recent GDP data showing strength in information-processing equipment. She said the latest revision to second-quarter GDP showed data-center construction contributing to stronger nonresidential investment. The Bureau of Economic Analysis' Sept. 30, 2026, third estimate put second-quarter real GDP growth at an annual rate of 2.2%, up 0.7 percentage point from the second estimate, mainly because of upward revisions to investment, consumer spending and government spending. 

"Of course, hiring and investment are costs before they become profits. For investors, the next question is whether that spending ultimately translates into stronger productivity, revenue, and earnings," Norton said.

Which labor market signals advisors should watch

DeRusso said temp workers, trucking and warehouse jobs, and engineering firms deserve more attention than they get:

• Temp hiring tends to turn first in either direction because it is the easiest staffing to add and the easiest to cut.
• Engineering firms typically hire a year or more before projects break ground, which gives a read on future construction spending.
• Hours worked matter because companies cut hours before they cut people. Flat job growth with shrinking hours signals a deterioration the headline won't show.

She said sustained hiring is a meaningful signal precisely because it is costly to reverse. "So, when a company keeps hiring for the same roles quarter after quarter, it's betting real money that the demand is going to stick around. That's more convincing than an order that can be canceled with a phone call," DeRusso said.

She cautioned that persistent openings are not automatically good news for a stock. "There are two reasons a job stays open: either business is booming and they need more hands or they can't find the specific skill they need. In the latter case, the employer has to keep raising pay and their margins get squeezed," she said.

When hiring, capital spending and earnings line up

All three strategists described a similar framework. Hiring shows what management intends, capital spending shows what companies have committed, and corporate fundamentals show whether the investment is paying off.

"Investors should explore opportunities when all three are moving in the same direction. Sustained hiring alongside rising investment and stronger orders can point to growth that earnings expectations haven't fully captured," Helfstein said. He cited the data center buildout, where spending creates demand for infrastructure suppliers. "The portfolio question is whether that momentum is already reflected in valuations, and how much exposure clients already have," he said.

Norton said alignment across the three gives advisors stronger evidence that a theme reflects a real economic shift rather than market enthusiasm. A split between them is also worth studying. "When they diverge, that can be equally informative – and a reason to look more closely. Finally, don't forget price. The data may verify the economic reality, but it's possible valuations already account for the transition," she said.

DeRusso said the mismatches are often the most revealing cases:

• Heavy hiring without equipment spending means growth by adding people, which gets expensive fast.
• Heavy spending without hiring usually signals automation. In that case, the company selling the machines may be the better investment.
• An entire industry hiring and building at once is adding capacity, which is often when returns start to disappoint.

"The jobs report gets revised twice, so it's useful for confirming what you already believe about a three- or six-month trend," DeRusso said.