The U.S. economy added far more jobs than expected in August, signalling a sharp reversal of the summer hiring slowdown that had unsettled markets.
Nonfarm payrolls rose a seasonally adjusted 162,000 for the month, more than three times the Dow Jones economist consensus forecast of 53,000.
The unemployment rate held steady at 4.1%, matching expectations, according to the Bureau of Labor Statistics report published Friday.
August’s total marked the strongest monthly gain since March, providing fresh evidence that the labour market remains on solid footing.
“Net, net, the labor market is alive and well and generating thousands of new jobs to help keep economic growth squarely in the plus column,” said Chris Rupkey, chief economist at Fwdbonds.
The report was consistent with what Federal Reserve officials have described as a stable labour market, and now turns attention firmly toward next week’s inflation data.
Consumer and producer price readings are scheduled for Thursday and Friday respectively, and are seen as the final determinants ahead of the Fed’s interest rate decision at its September 15-16 policy meeting.
“An upside surprise in payrolls will likely ramp up concerns about a rate hike, but that outcome is in the hands of next week’s inflation numbers,” said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.
Zentner added: “If those come in cooler than expected, the Fed will likely feel comfortable discounting potentially inflationary signals coming out of the labor market.”
Stock market futures moved mostly lower following the release, while Treasury yields rose sharply, particularly at the short end of the curve where Fed policy carries its greatest impact.
Following the stronger-than-expected result, traders priced in approximately 60% odds of a quarter percentage point rate hike at the September meeting, according to the CME Group’s FedWatch tool.
Fed Chairman Kevin Warsh had signalled last week that a rate increase was a strong possibility, though remarks this week from Governor Christopher Waller and other officials have made the outlook less certain.
The Federal Open Market Committee has not adjusted the federal funds rate since three cuts in the latter part of 2025, with policymakers expressing heightened concern over inflation that has run above the Fed’s 2% target for five and a half years.
Governor Michael Barr and Waller both indicated they would be prepared to raise rates if inflation data does not show sufficient moderation on a monthly basis.
New York Fed President John Williams told CNBC earlier this week that he remains in “wait-and-see” mode on the incoming data.
President Donald Trump welcomed the figures, calling the August report a “great jobs number” while urging the Fed to cut rather than raise rates.
“The Fed Board, with its great new leader, must get smart – BE PATRIOTS for a change,” Trump wrote in a social media post, adding that high interest rates put the U.S. at an unfair disadvantage.
Trump further threatened to halt trade with countries with which the U.S. runs a deficit unless the Fed moves to cut, noting the U.S. carries a deficit with more than 90 nations.
Restaurants and bars led job creation with 59,000 new positions, while government education added 42,000 and manufacturing contributed 16,000 jobs.
Health care, typically the primary engine of job growth, added just 13,000 positions, well below its 12-month monthly average of 32,000.
Information-related industries shed 23,000 jobs, putting the 12-month average at a loss of 8,000, with analysts pointing to the impact of artificial intelligence investment as a possible factor.
The household survey showed employment rising by 569,000 and a surge of 683,000 people entering the labour force, with the participation rate up 0.2 percentage points.
An alternative unemployment measure counting discouraged workers and those in part-time roles for economic reasons fell to 7.7%, its lowest level since June 2025.
Prior months were revised upward, with July swinging to a gain of 21,000 from a previously reported loss of 23,000, and June revised up to a gain of 31,000.
Average hourly earnings rose 0.3% for the month, in line with expectations, while the annual increase of 3.1% came in 0.1 percentage points ahead of forecasts.