The US job market lost more steam in August, sparking fresh worries about the strength of the world’s largest economy.
Employers added just 22,000 jobs last month far fewer than expected while the unemployment rate crept up to 4.3% from 4.2%, according to the labour Department.
The disappointing report adds to a string of weak data this summer. Just weeks ago, officials admitted that hiring in May and June was far weaker than first reported. In fact, the labour Department now says the US actually lost jobs in June, the first decline since 2020.
For investors, the bleak numbers were confirmation that the Federal Reserve is all but certain to cut interest rates when it meets this month. “The warning bell that rang in the labour market a month ago just got louder,” said Olu Sonora, head of US economic research at Fitch Ratings.
Trump Fires labour Stats Chief
President Donald Trump reacted furiously, abruptly firing the head of the Bureau of Labor Statistics. He accused her without offering any evidence of rigging the numbers to make him look bad.
But economists point to Trump’s own policies as a major drag. His sweeping changes to tariffs and immigration rules have raised costs and created uncertainty for businesses. At the same time, his administration has slashed government spending, cutting thousands of public-sector jobs.
Last month alone, the federal government shed 15,000 positions, while manufacturing and construction firms also posted declines. Health care was one of the few industries still adding workers.
“Four straight months of manufacturing job losses stand out,” said Sonora. “It’s hard to argue that tariff uncertainty isn’t a key driver of this weakness.”
A Slowing Trend
The pace of hiring has been cooling steadily since the post-pandemic boom. But with fewer immigrants entering the workforce under Trump’s crackdown, analysts say the economy now needs to create only about 50,000 jobs a month to keep up with population growth far fewer than in past years.
Despite the gloomy report, markets didn’t panic. Stocks opened slightly higher, and average hourly pay rose 3.7% over the past year. Bond yields also dropped sharply as investors bet on Fed rate cuts.
“Bad news looks like good news, at least this morning,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.
Trouble Beneath the Surface
Still, the warning signs are piling up. Job openings this week fell to their lowest level since 2024, and for the first time since the pandemic, there are more job seekers than available positions. Unemployment claims have also ticked higher, and the current jobless rate is now at its highest since October 2021 though still close to historic lows.
White House economic adviser Kevin Asset admitted the numbers were “disappointing” but insisted future revisions could paint a brighter picture.
For now, though, the message from August is clear: America’s job market is running out of steam.
