The US jobs market showed fresh signs of weakness in August, adding to growing concerns about the health of the world’s largest economy. According to the Labor Department, employers created just 22,000 jobs last month, well below expectations, while the unemployment rate edged up from 4.2% to 4.3%.
The figures marked the latest in a series of disappointing data releases. Earlier revisions revealed that hiring in May and June was far weaker than initially reported, with June actually recording a job loss — the first monthly decline since 2020. The slowdown underscores a broader cooling trend that began after the post-pandemic rebound.
The data virtually guarantees that the Federal Reserve will cut interest rates at its upcoming meeting, investors said. “The warning bell that rang in the labour market a month ago just got louder,” noted Olu Sonola, head of US economic research at Fitch Ratings.
President Donald Trump reacted by firing the head of the Bureau of Labor Statistics, accusing her of manipulating the figures to damage him politically. Economists, however, argue that the weakening job market is tied to his administration’s own policies. Sweeping changes to tariffs and immigration have increased costs and uncertainty for businesses, while government austerity has resulted in thousands of public sector job losses.
In August, federal government payrolls shrank by 15,000, while manufacturing and construction also cut workers. Health care was one of the few sectors to show job gains. “Four straight months of manufacturing job losses stand out,” Sonola said. “It’s hard to argue that tariff uncertainty isn’t a key driver of this weakness.”
The broader trend reflects a steady decline in monthly job creation since the pandemic recovery. Still, analysts point out that the economy now requires fewer new jobs — roughly 50,000 per month — to keep pace with population growth. Trump’s immigration clampdown has reduced the inflow of new workers, changing the dynamics of labor supply.
Markets took the weak numbers in stride. Stocks opened slightly higher on Friday, as investors focused on the prospect of a rate cut rather than the slowdown itself. Bond yields fell sharply, signaling growing confidence in Fed action. “Bad news looks like good news, at least this morning,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.
Average hourly pay rose 3.7% year-on-year, offering some relief for workers despite the broader slowdown. Yet signs of stress are mounting: job openings have dropped to their lowest since 2024, unemployment claims have risen, and for the first time since the pandemic, job seekers now outnumber available positions.
White House economic adviser Kevin Hasset acknowledged the disappointing report but argued that future revisions could improve the picture. For now, however, the August numbers highlight the fragile state of the US labour market and the political storm brewing around it.