Only 22,000 jobs were created in August as the unemployment rate rose to 4.3%.
The August jobs report was worse-than-expected as only 22,000 new jobs were created last month, according to the U.S. Bureau of Labor Statistics.
It is the continuation of anemic job growth in 2025, particularly over the summer when an average of about 27,000 jobs per month have been created from may through August. That’s down from an average of 139,000 new jobs over the summer in 2024.
From January through August, the U.S. economy has averaged 85,000 new jobs per month, compared to about 168,000 per month through the first eight months of 2024.
The 22,000 new jobs in August fell far short of the 75,000 jobs that were expected by economists.
The unemployment rate increased to 4.3%, up from 4.2% in July. The 4.3% unemployment rate was in line with projections.
Negative job growth in public sector
In August, the private sector added 38,000 jobs, which is below the 54,000 new private sector jobs that the ADP National Employment Report for August cited.
The public sector actually lost 16,000 jobs in August, down from July when 2,000 government jobs were added.
In the private sector, 25 million goods producing jobs were lost. This was offset by 63,000 new service-related jobs.
- Manufacturing lost 12,000 jobs
- Wholesale trade lost 12,000 jobs
- Construction lost 7,000 jobs
- Healthcare and social assistance added 47,000 jobs
- Leisure and hospitality added 28,000 jobs
- Retail trade added 11,000 jobs
Also, the report found that the average hourly earnings for the private sector rose by 10 cents to $36.53 in August. Over the past 12 months, average hourly earnings have increased by 3.7%.
The poor job numbers boosted hopes that the Fed will cut interest rates when it meets September 16-17. CME’s FedWatch says 100% of interest rate traders now think the Fed will cut rates in September. About 88% say it will be a 25 basis point cut, while 12% expect a 50-basis point reduction. Before the August jobs report came out, no one, literally 0% according to CME FedWatch, expected a 50-basis point cut.
“The labor market is coming to a standstill as businesses slow the pace of hiring and await clarity on tariffs and Fed policy,” Jeffrey Roach, chief economist for LPL Financial, said. “As the Fed prepares for its upcoming meeting, policy makers will likely focus on the weakness in the job market to defend their decision to cut rates. The labor data is probably not weak enough for the Fed to cut by 50 basis points given inflation persistence, so as of now, our expectations are for a 25-basis point cut.”
Stocks were flatlining on Friday, torn between the negative aspects of slow job growth and the rising prospects of rate cuts.
