U.S. job growth in August was robust and the unemployment rate remained stable, indicating a more vibrant labor market than previously expected.
According to data released Friday by the U.S. Bureau of Labor Statistics, nonfarm employment rose by 162,000 in August, while July’s unemployment figures were revised to zero.
The report shows the labor market is overcoming uncertainty from the Iran conflict and inflationary pressures, maintaining strong momentum. Federal Reserve officials may interpret this as a compelling argument for raising interest rates, but next week’s consumer price data will be crucial for the Fed’s decision later this month.
The broad increase in employment was primarily driven by a rebound in leisure and hospitality jobs after sharp declines in June and July. The local government education sector also added about 42,000 jobs following significant layoffs last month. Employment in this category can fluctuate significantly during summer months, as many teachers temporarily leave their positions before returning at the start of the new school year.
Manufacturing employment saw its largest gain since 2023, while construction added the highest number of jobs since January. Many economists pointed out that data center construction has been the main driver behind increased demand for construction workers this year.
Financial activities and information industries—both seen as particularly vulnerable to job losses related to artificial intelligence—combined lost 34,000 jobs.
Following the report release, President Donald Trump commented on social media, urging the Fed to cut interest rates.
However, other employment data suggest the labor market remains in a low-hiring, low-layoff pattern. Job openings rose slightly in July, while layoffs declined, signaling steady yet weak labor demand. ADP Research data indicated that U.S. businesses added jobs at a relatively moderate pace in August, suggesting a slowdown in hiring momentum.
“Although long-term structural issues persist, the labor market has shown signs of short-term cyclical strength,” said Adam Hickling, senior economist at Vanguard. “This report alone is unlikely to substantially affect the Fed’s outlook. The labor market remains resilient enough that inflation will remain the central focus.”
Elias Haddad, global markets strategist at Brown Brothers Harriman, wrote in a client report that the Fed’s September 16 decision to raise rates “depends on Friday’s U.S. August CPI data.” “If CPI comes in strong, a September rate hike is almost certain, supporting a stronger dollar. If the data is weak, it would favor keeping rates unchanged and make the dollar more susceptible to dovish policy adjustments by the Fed.”
