US Employers Blow Past Forecasts With 162,000 August Jobs

US nonfarm payrolls surged by 162,000 jobs in August — the largest gain in five months — as unemployment held steady at 4.1%, lifting rate-hike odds.

US nonfarm payrolls surged by 162,000 jobs in August, the largest gain in five months, while the unemployment rate held steady at 4.1% despite the labor force expanding by 683,000 people. The rebound, reported by the Labor Department's Bureau of Labor Statistics on Friday, followed an upwardly revised gain of 21,000 jobs in July — a figure once reported as a 23,000-job decline. June payrolls were also revised upward by 11,000. Leisure and hospitality led the way with 62,000 jobs, including 59,000 at restaurants and bars, while construction added 22,000, manufacturing 16,000, and local government education 42,000. Economists had expected only a fraction of the actual increase.

The report defied months of decelerating momentum that had partly been blamed on the oil price shock and supply chain strains from the US-led war with Iran. Payroll estimates for August ranged from a loss of 25,000 jobs to a gain of 121,000, and July had averaged hiring of just 38,000 jobs a month from May through July, per Reuters polling and Times Now. The share of industries adding workers climbed to 55.6%, the highest since December 2024, and the average workweek lengthened to 34.4 hours. Some economists cautioned that seasonal-adjustment difficulties may have flattered August after restraining July, warning the rebound may reflect recovery rather than a sustained acceleration.

The strong report upended expectations for the Federal Reserve's September 15-16 meeting. Financial markets priced in roughly a 62% chance of a quarter-percentage-point rate hike, up from about 49% on Wednesday, according to CME's FedWatch tool, with the benchmark rate currently in a 3.50%-3.75% range. President Trump celebrated the figures on social media, while Fed Governor Christopher Waller said he was inclined to keep rates steady if inflation pressures were cooling but could support an increase if inflation remains elevated. The stakes extend to housing: the 30-year fixed mortgage rate hit a more than one-year high of 6.71% this week, per Freddie Mac data reported by Reuters.

Beneath the headline strength, the labor market remains uneven. Wage growth slowed to 3.1% year over year, the weakest annual increase since May 2021, and healthcare hiring of 13,000 ran well below its 32,000 monthly average — a slowdown some economists tie to the revocation of Temporary Protected Status for hundreds of thousands of Haitian immigrants. The information sector shed 23,000 jobs, losses attributed to AI adoption, while long-term unemployment rose by 159,000 people. With immigration tightening the labor pool, economists put the economy's break-even hiring rate between zero and 50,000 jobs a month. Next week's August CPI report will help determine whether the Fed raises rates or holds.