The US jobs market stalled over the summer, adding just 22,000 jobs in August and continuing a slowdown in the labor market as businesses adjusted to disruptions caused by tariffs.
The latest jobs report also contained more bad news. The US lost 13,000 jobs in June, according to the latest survey, the first time it went into the negative since December 2020.
The unemployment rate for August inched up to 4.3%, the highest it has been since 2021.
The healthcare sector added 31,000 last month but most other sectors were flat or lost jobs.
Chart of US jobs
The report highlighted worrying trends:
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Federal employment dropped 15,000 jobs in August, totaling 97,000 jobs lost since January.
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Manufacturing jobs went down by 12,000 in August and have tumbled 78,000 for the year.
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The racial unemployment gap widened in August. Black Americans are seeing an unemployment rate of 7.5%, compared to 6.1% last August. The unemployment rate for White Americans is 3.7%
The closely watched data comes from a monthly survey of employers conducted by the Bureau of Labor Statistics (BLS), which has been under attack from Donald Trump after it revised its findings last month, showing that hiring in early summer was much weaker than initially reported.
Last month the BLS slashed the number of new jobs created in May and June by by more than 250,000. The figures – revised when the bureau received more reports from businesses and government agencies – showed hiring over the summer was far weaker than first reported. The revised figures for May and June were 19,000 and 14,000, respectively – the lowest since the pandemic.
Those figures were revised again this month. The BLS revised June’s tally down by 27,000, from +14,000 to -13,000, and the change for July was revised up by 6,000, from +73,000 to +79,000. Employment in June and July combined was 21,000 lower than previously reported.
Though Trump claimed the revisions were “rigged in order to make the Republicans, and me, look bad”, August’s figures show that the slumped pattern has continued even after Trump fired the bureau’s commissioner in retaliation. Trump has nominated a conservative ally who helped write Project 2025 as the bureau’s commissioner, leaving many economists worried about the future of the bureau.
And data from other sources besides the bureau has also highlighted stagnation in the labor market. The payroll firm ADP reported on Thursday that private employers added 54,000 jobs in August, nearly 20,000 below expectations. The outplacement firm Challenger, Gray & Christmas also reported that job cuts reached 85,979 in August – up 39% from July and up 13% compared with August 2024.
“The year started with strong job growth, but that momentum has been whipsawed by uncertainty. A variety of things could explain the hiring slowdown, including labor shortages, skittish consumers and AI disruption,” said Nela Richardson, the chief economist at ADP.
The Federal Reserve has been monitoring the labor market for signs that it may need to adjust interest rates. At his speech at the Fed’s Jackson Hole, Wyoming, symposium last month, the Fed chair, Jerome Powell, seemed to hint that officials were leaning toward a rate cut at their next meeting on 17 September.
Though Wall Street investors have been waiting for the Fed’s next rate cut, which would be its first since December, the next cut will probably come with caveats. Powell emphasized that it was still unclear what impact Trump’s tariffs and immigration policies will have on the economy.
“There is significant uncertainty about where all of these policies will eventually settle and what their lasting effects on the economy will be,” he said.
Powell warned that while there are new jobs being added each month, “the downside risks to employment are rising. And if those materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.”
Powell, who was first appointed by Trump in 2017 and again by Biden in 2022, reaches the end of his second term in May 2026. Trump earlier this year walked back on threats to fire Powell after stock markets responded poorly to his comments and the supreme court implied that the Fed chair has special protection from termination.
But the White House has continued pressuring the Fed, including firing Lisa Cook, a Fed governor, for alleged mortgage fraud, and implying that the weak job numbers are due to the central bank’s inaction. On Friday, Trump and his cabinet zeroed in on Powell again and attacked the Fed for being “too late” to lower interest rates.
“Jerome ‘Too Late’ Powell should have lowered rates long ago. As usual, he’s “Too Late’!” Trump wrote on Truth Social Friday.
Lori Chavez-DeRemer, labor secretary, told Fox Business that Powell “should be embarrassed by this report because he has not done his job”. Meanwhile, Scott Bessent, the treasury secretary, published an op-ed in the Wall Street Journal on Friday morning, arguing that the Fed over the years has “blurred the lines between monetary and fiscal policy” and accused the Fed of “regulatory overreach”.