Fresh government data shows US job growth nearly stoped in August, with only 22,000 positions added, against expectations of 75,000, while the unemployment rate climbed to 4.3%–the highest in almost four years. The Bureau of Labor Statistics (BLS) also revised June’s figures to a loss of 13,000 jobs, the first decline since 2020, reinforcing signs of a weakening labor market and adding pressure on the Fed to cut interest rates this month.
Job losses were concentrated in manufacturing, wholesale trade, construction, professional and business services, while gains were modest in healthcare (+31,000) and social assistance (+16,000). Federal government and public sector employment also continued to shrink, down 97,000 since January.
The labor data, released earlier this Friday, arrives ahead of the Fed’s policy meeting on September 16th and 17th, in two weeks, where officials, already inclined toward a rate cut, may take fresh signals from the employment slump. The White House hinted that the central bank could consider a larger cut, though markets anticipate a 25 bps reduction.
Causes and consequences
Economists largely attribute the slowdown to President Trump’s aggressive import tariffs and immigration restrictions, which have both shrunk the labor supply and heightened business uncertainty. These policies have also complicated hiring decisions across sectors. At the same time, attention is on major downward revisions, highlighting growing concerns around data credibility and political interference. Trump’s recent dismissal of the BLS commissioner, Erika McEntarfer, and nomination of E.J. Antoni have further intensified scrutiny.
Informal figures
Kevin Hassett, director of the White House National Economic Council, however emphasized that revisions may improve the headline numbers. Separately, New York Fed’s Williams warned that tariffs have added between 1 and 1.5 percentage points to inflation pressures. Still, he expects inflation (the PCE price index) to decline from 3-3.25% in 2025, with unemployment possibly rising to 4.5% next year.
The ADP National Employment Report, which tracks private payrolls, showed that layoffs rose 39% in August, the biggest jump for this month since 2020. For the first time since the pandemic, there were more people unemployed than available jobs, a warning sign that the U.S. labor market may be getting weaker in the months ahead.
