Topline
The labor market appeared to degrade further in August, according to Bureau of Labor Statistics data released Friday, the first by the agency after President Donald Trump ousted its leadership for alleged data manipulation.
The unemployment rate rose to 4.3% in August, above economist forecasts and July’s reading of 4.2%, according to FactSet.
The U.S. added 22,000 nonfarm jobs last month, well below analyst projections of 80,000 and a steep decline from the 79,000 added in July, revised up from 73,000.
Commerce Secretary Howard Lutnick told CNBC ahead of the data release he believed the jobs report would be more accurate after Trump ousted BLS commissioner Erika McEntarfer last month, adding, “I think they’ll get better.”
Earlier reports this week indicated labor market growth had slowed considerably, after ADP reported private sector employment increased by 54,000 jobs in August, well below forecasts of 85,000 and July’s 106,000 added jobs, and the Labor Department reported jobless claims increased to 237,000 last week, the highest level since June.
Fed Chair Jerome Powell suggested last month interest rates—sitting between 4.25% and 4.5% since December—could be cut if unemployment held steady. The Fed weighs its dual mandate of stabilizing inflation—which has largely driven interest rate-setting policy over the past few years—with maintaining maximum employment. Analysts from Oxford Economics wrote recently that August’s jobs report would need to be “significantly stronger” than Wall Street expected to dissuade the Fed from cutting rates. There’s a 99.1% probability the central bank lowers its benchmark rate by at least a quarter-point after its next policymaking meeting on Sept. 17, according to CME’s FedWatch tool.
The next economic report under close watch by the Fed will be inflation data released by the BLS on Sept. 11. Wall Street expects consumer prices to have risen to 3.1% in August, up from 2.7% in July.
The jobs report was seen as a possible flashpoint for the labor market, after the U.S. added an average of 123,000 jobs from January to April. The U.S. now has slightly more unemployed people (7.2 million) than job openings (7.18 million) for the first time since April 2021, as ADP chief economist Nela Richardson warned job growth had been “whipsawed with uncertainty” spurred by labor shortages and “skittish” consumers. ADP’s report in July—finding an increase of 106,000 private-sector jobs—showed signals that were “broadly indicative of a healthy economy,” Richardson said. A poor jobs growth reading from BLS in July, which included the largest two-month downward revision since 1968, fueled Trump’s decision to oust McEntarfer, whom Trump also alleged had manipulated jobs data during the 2024 election.