^{Photo: The Ecoomic Times}

The U.S. labor market lost momentum in August, delivering one of its weakest monthly payroll gains in years. Nonfarm payrolls rose by just 22,000, far below economists’ projections of 75,000, while the unemployment rate inched up to 4.3%, according to the latest Bureau of Labor Statistics (BLS) report.

This slowdown comes after July’s revised increase of 79,000 jobs, highlighting a sharp deceleration in hiring. June also saw downward revisions, with a net loss of 13,000 jobs. Together, these adjustments paint a picture of a labor market struggling to maintain growth as businesses contend with high costs, trade pressures, and slowing demand.

Sectors Driving Gains and Losses
Despite the headline miss, healthcare once again proved resilient, adding 31,000 positions. Social assistance followed with 16,000 new jobs. However, these gains were offset by losses in key industries: wholesale trade and manufacturing both shed 12,000 jobs each, while the federal government cut 15,000 positions.

The result is a mixed picture—some industries continue to expand steadily, while others are contracting under the weight of economic uncertainty and ongoing tariff disputes.

Market Reactions and Fed Implications
Financial markets took the weak report in stride. Stocks opened higher, and Treasury yields fell sharply as investors priced in an almost certain interest rate cut at the Federal Reserve’s September 17 meeting. Futures markets now assign a 100% probability of a quarter-point cut and even suggest a 12% chance of a half-point move, according to CME Group’s FedWatch tool.

“The labor market is losing altitude,” said Daniel Zhao, chief economist at Glassdoor. “August’s numbers confirm turbulence ahead, and policymakers must navigate carefully to avoid a hard landing.”

Political and Institutional Backdrop
This month’s report was also notable as the first payroll release since President Donald Trump dismissed former BLS Commissioner Erika McEntarfer. The move came after July’s weak job figures and revisions raised criticism of the agency’s reliability. Trump has nominated economist E.J. Antoni, a Heritage Foundation fellow, to take the role permanently, though William Wiatrowski is currently serving as acting commissioner.

Wages and Participation
Wage growth offered a silver lining. Average hourly earnings rose 0.3% in August, in line with expectations, though annual growth slowed slightly to 3.7%, just under the 3.8% forecast. The labor force participation rate edged higher to 62.3% as more Americans entered the workforce. The household survey showed stronger numbers, with employment rising by 288,000, though the unemployed population also grew by 148,000.

A broader unemployment measure, which includes discouraged workers and part-time employees seeking full-time work, climbed to 8.1%—the highest level since October 2021.

Manufacturing Weakness and Tariff Concerns
One troubling trend is persistent weakness in manufacturing. The sector has now logged four straight months of job losses, underscoring the toll of global trade tensions and tariff uncertainty. Analysts warn this could weigh further on growth in the months ahead.

“The warning bell just got louder,” said Olu Sonola, head of U.S. economic research at Fitch Ratings. “The job losses in manufacturing show that trade disputes remain a major drag on hiring.”

Looking Ahead
The BLS will soon release benchmark revisions covering data through March 2025, which could further alter the picture. Past August reports have often seen revisions, and White House officials have already suggested this month’s figure may ultimately be revised higher.

For now, however, the latest report underscores a slowing job market at a time when inflation risks remain elevated. With hiring momentum fading and unemployment ticking upward, all eyes are on the Fed’s next move—and whether it can engineer stability without tipping the economy into recession.