Employers across the U.S. added 22,000 jobs in August, falling short of economists’ muted expectations and signaling the labor market is facing sharp headwinds from mounting economic uncertainty amid the Trump administration’s wide-ranging tariffs.
The numbers
Economists had forecast payroll gains of 80,000 last month, according to a poll by FactSet.
The unemployment rate rose to 4.3% in August, up from 4.2% in July, the Bureau of Labor Statistics said.
The latest data points to an ongoing slowdown in the labor market, with employers hiring an average of 29,000 each month from June through August, versus 168,000 workers each month in 2024. Revised data shows that employers shed 13,000 jobs in June rather than adding the 14,000 that had been reported a month earlier, marking the first decline since late 2020.
Some companies are paring back hiring plans amid the on-again, off-again uncertainty of the Trump administration’s tariffs, which are import duties paid by U.S. companies. Businesses in seven of the Fed’s 12 regional districts canvassed in the latest so-called Beige Book, a survey of local economic conditions, said they were hesitant to hire because of weaker demand and uncertainty over the near-term outlook.
“August’s employment report confirmed that the labor market has headed off a cliff-edge,” Bradley Saunders, North America economist at Capital Economics, said in a Friday research report.
Consumers are also dour, with a new CBS News poll finding that Americans are continuing to rate the U.S. economy negatively, with most respondents picking “uncertain” and “struggling” to describe its current state.
The August jobs report marks the first since President Trump fired former Bureau of Labor Statistics Commissioner Erika McEntarfer on Aug. 1 in the wake of a disappointing July jobs report, which included a significant downward revision of May and June hiring figures.
Citing the large revisions, Mr. Trump questioned the validity of the government data, although the BLS typically revises its prior reports each month based on fresher responses from employers.
The new revisions
On Friday, the BLS revised the prior two months’ data, showing that employers shed 13,000 jobs in June, revising the month’s hiring downward by 27,000 fewer jobs. That marks the first monthly decline in hiring since December 2020, when the U.S. was in the midst of an economic crisis caused by the pandemic.
The BLS also revised July’s jobs numbers upward, showing that employers added 79,000 workers that month, rather than the 73,000 reported in August.
The revisions show that the economy added 21,000 fewer jobs in June and July than had earlier been reported by the BLS.
What economists say
The labor market data is complicating the Federal Reserve’s next rate cut decision, which set for Sept. 17. The central bank’s dual mandate requires it to ensure that both inflation and unemployment remain low, but inflation has been edging upward, which economists say is partly due to Mr. Trump’s tariffs.
The Fed’s most powerful weapon for battling inflation is to hike interest rates, yet its best option for helping the job market is to lower borrowing costs, making it cheaper for businesses to expand. With the combination of rising inflation and weaker hiring, the Fed is in a tough position, economists say.
Last month, Fed Chair Jerome Powell, who has been under pressure from Mr. Trump to cut rates, signaled that the central bank is open to reducing rates at its September meeting, citing risks to the labor market.
“The labor market continues to show fatigue as businesses hold back on hiring amid uncertainty around the direction of inflation, tariffs and the strength of the underlying economy,” said Joe Gaffoglio, CEO at Mutual of America Capital Management, in an email after the data was released.
“Recent labor data showed that more individuals are unemployed in the U.S. (7.24 million) than there are available jobs (7.18 million), which hasn’t happened since April 2021,” he added.
The latest data is likely to ensure a rate cut at the Fed’s next meeting, experts said on Friday. The lower-than-expected hiring, as well as June’s negative revision, could also persuade the central bank to cut later in the year as well, they added.
“The Federal Reserve needs to cut interest rates in September and probably October and December, too. The ‘no hiring’ economy is turning to a layoff economy and if that worsens, it will lead to a recession. This needs to be stopped,” Heather Long, chief economist at Navy Federal Credit Union, said in an email.
