U.S. nonfarm payrolls rose by only 22,000 in August, falling well short of the 75,000 expected and down from 73,000 in July, according to the Bureau of Labor Statistics. The unemployment rate ticked up to 4.3%, in line with forecasts, while prior months’ job growth was revised down by a combined 21,000—including a rare decline of 13,000 in June.
Wage pressures moderated, with average hourly earnings up 0.3% month-over-month, matching expectations but slower than July. On a year-over-year basis, earnings eased to 3.7% from 3.9%. Labor force participation improved slightly to 62.3%, suggesting more workers are returning to the job market despite weaker hiring demand.
The report strengthens the case for the Federal Reserve to resume rate cuts at its September meeting. Fed funds futures now imply sequential 25-basis-point cuts in both September and October, rather than a larger move in September. Chair Jay Powell has described the labor market as caught in a “curious balance,” where hiring demand has softened while immigration restrictions have constrained the supply of available workers.
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