The United States labour market has begun to stall as employers face economic uncertainty due to tariffs imposed by US President Donald Trump and an immigration crackdown that has softened the labour pool.
The economy added 22,000 jobs in August, while the unemployment rate rose to 4.3 percent, according to the report published by the US Department of Labor on Friday, the latest sign of slowing momentum in the labour market.
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Healthcare added 31,000 jobs and social assistance 16,000, making them the only sectors to see significant gains.
Smaller increases were reported in construction, retail, professional and business services, and leisure and hospitality. Those advances were offset by losses in other areas, including 15,000 federal government jobs, 12,000 in manufacturing, and 6,000 in oil and gas extraction.
“Another poor jobs report thanks to tariffs. With the benefit of revisions, it’s increasingly clear that tariffs are weighing on hiring and jobs. Manufacturing jobs are falling sharply, and so are other trade-sensitive sectors like mining and wholesale trade,” said Skanda Amarnath, executive director of Employ America and a former Federal Reserve economist, in a note provided to Al Jazeera.
July’s report was revised up slightly, to 79,000 jobs added versus 73,000. June’s figures, however, were cut sharply, from 14,000 jobs added to 13,000 lost.
“After all of the revisions are now in, jobs fell in June. We don’t see that outside of natural disasters, recessions, or the periods right around recessions,” Amarnath said.
White House economic adviser Kevin Hassett told CNBC the August numbers were “disappointing”, but said he expected revisions to bring improvements in the months ahead.
“President Trump knows that we’re super optimistic about the future of the jobs numbers,” Hassett said later at the White House.
Broader slowdown
The August report adds to a series of weak indicators this week that point to a cooling labour market.
The Job Openings and Labor Turnover Survey on Wednesday showed vacancies dropped to their lowest levels since the early months of the COVID-19 pandemic. For the first time since April 2021, there are now more unemployed workers than available jobs.
Private-sector hiring has also slowed. The ADP National Employment Report released on Thursday showed payrolls rising by 54,000 in August, down sharply from 106,000 the prior month. The ADP survey does not include government jobs.
“The year started with strong job growth, but that momentum has been whipsawed by uncertainty,” Nela Richardson, ADP’s chief economist, said in the release.
Layoffs are also rising. A report from Challenger, Gray & Christmas showed announced job cuts surged by 39 percent in August compared to July, with US employers cutting more than 85,000 positions. That figure is up 13 percent from a year earlier. So far this year, employers have cut more than 892,000 jobs, the highest total since 2020.
Political fallout
The weak data comes just weeks after Trump dismissed Bureau of Labor Statistics (BLS) Commissioner Erika McEntarfer after the bureau drastically revised down the May and June payroll figures.
“This jobs report also affirms what we already knew — that President Trump’s firing of BLS Commissioner Erick McEntarfer was completely unwarranted and was definitionally a case of shooting the messenger,” said Angela Hanks, chief of policy programmes at The Century Foundation, in comments provided to Al Jazeera.
Trump has nominated EJ Antoni, chief economist at the far-right conservative think tank Heritage Foundation, to replace McEntarfer. Antoni has previously suggested suspending the monthly jobs report altogether.
There have been widespread concerns that Trump’s pressure on the otherwise non-partisan agency could challenge the reliability of the data going forward. “The question on everyone’s mind is whether we can trust this data given the political firing [of McEntarfer] – and this president’s efforts to politicise policy and data that had historically been kept separate from politics,” Michele Evermore, a former Department of Labor official, said in remarks shared with Al Jazeera.
The president and his allies’ comments on Friday did not quell those concerns.
“The real numbers that I’m talking about are going to be whatever it is, but will be in a year from now on,” Trump told reporters on Thursday. “You’re gonna see job numbers like our country has never seen.”
“I think they’ll get better [job numbers] because he’ll take out the people who are just trying to create noise against the president,” Commerce Secretary Howard Lutnick told CNBC.
Fed in focus
The latest employment numbers land less than two weeks before the US Federal Reserve’s next policy meeting. The central bank closely monitors jobs data in setting interest rates, balancing signs of labour market weakness against persistent inflation.
The White House has repeatedly pressed Fed Chair Jerome Powell to cut rates. In case there is a cut in the September 16-17 meeting, as is now expected, it will be the first reduction since December.
Upon the release of the report, Trump reupped his pressure on the central bank.
“Jerome ‘Too Late’ Powell should have lowered rates long ago. As usual, he’s ‘Too Late!’” Trump posted on his social media platform, Truth Social.
US markets slumped on the disappointing report. The Nasdaq is down 0.3 percent, the S&P is also down 0.6 and the Dow Jones Industrial Average is trending downwards as well — 0.7 percent below the market open as of 2pm in New York (18:00).
