Job Market Weakens in August
WASHINGTON: The U.S. unemployment rate rose to 4.3% in August, the highest in nearly four years. Job growth slowed sharply, signaling weakness in the labor market. Economists believe the data strengthens the case for a Federal Reserve interest rate cut this month.
First Job Loss in Years
The Labor Department reported the first monthly job loss since December 2020. June payrolls were revised to show a decline of 13,000 jobs instead of a previously reported gain. Economists fear this trend points to stagnation.
Hiring Slows Across Sectors
Nonfarm payrolls increased by only 22,000 in August, well below forecasts of 75,000. Healthcare added 31,000 jobs, but gains were below average. Social assistance added 16,000 positions. Federal government jobs fell by 15,000. Manufacturing, trade, construction, and professional services all shed jobs.
Trump Policies Blamed
Economists blame tariffs, immigration crackdowns, and public sector cuts for weak hiring. President Donald Trump has also criticized Federal Reserve Chair Jerome Powell for not cutting interest rates sooner.
Wage Growth Holds Steady
Despite weak hiring, wages showed strength. Average hourly earnings rose 0.3% in August, up 3.7% year-on-year. However, fewer hours worked raised concerns about growth.
Revisions and Outlook
Economists warn employment levels could be revised down by as much as 800,000 when the Bureau of Labor Statistics publishes updated data. Job growth has averaged only 29,000 per month over the past three months compared to 82,000 in the same period last year.
Fed Rate Cut Expected
Financial markets expect the Federal Reserve to cut rates by 0.25% at its September meeting. Two more cuts are likely before year-end. Stocks and the U.S. dollar fell after the report, while Treasury yields declined.
Labor Force Strain
The unemployment rate rose from 4.2% in July to 4.3% in August. More people entered the labor force, but fewer found jobs. Long-term unemployment also increased, with average joblessness stretching to 24.5 weeks.
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