U.S. labor markets faltered this summer, with August data adding to the slowdown. Economists had expected 78,000 new jobs — a sharp pullback from previous months — but the actual figures were even more disappointing.
According to the Bureau of Labor Statistics, the U.S. added just 22,000 jobs in August, extending a labor-market slump as businesses adjusted to disruptions caused by tariffs.
The latest jobs report also brought more bad news: June’s numbers were revised downward, showing the U.S. economy lost 13,000 jobs that month. It marked the first negative month since December 2020. The unemployment rate for August inched up to 4.3%, the highest it’s been since 2021.
The Bureau of Labour Statistics (BLS) has been under fire from Donald Trump after last month’s revisions showed that hiring in early summer was much weaker than initially reported. Trump claimed the revisions were “rigged in order to make the Republicans, and me, look bad”. Still, August’s figures confirm that the slowdown continued even after Trump fired the bureau’s commissioner in retaliation. Independent data sources have also highlighted stagnation in the labor market.
Markets reacted unevenly to the data release. Dow futures slipped 60 points, or 0.13%. Meanwhile, S&P 500 futures gained 0.2% and Nasdaq 100 futures rose 0.6%. Yields on the 2-year, 10-year and 30-year Treasuries dropped as investors moved into bonds, signaling expectations for a weakening economy.
At the start of the trading day, the S&P 500 rose 0.4% while the Nasdaq Composite index, laden with tech stocks highly sensitive to interest rate expectations, was up 0.6%
The Federal Reserve has been closely monitoring the labor market for signs that it may need to adjust interest rates. In his speech at the Fed’s Jackson Hole symposium last month, Fed chair Jerome Powell suggested officials were leaning toward a rate cut at their next meeting on 17 September.
While Wall Street investors have been waiting for the Fed’s next rate cut, which would be its first since December, the next cut will likely come with caveats. Powell cautioned that its scope will depend on how tariffs and immigration policies ultimately affect the economy.
