The United States added 162,000 jobs in August, a figure that topped all estimates in a Bloomberg survey and suggests the labor market has more momentum than previously thought. The Bureau of Labor Statistics reported that nonfarm payrolls increased last month and that July’s job losses were revised away, showing a stronger recovery than the initial reading indicated. The unemployment rate remained steady at 4.1%, a figure that officials will likely point to when debating the next move on interest rates.
A broad advance in payrolls was driven by a rebound in leisure and hospitality employment and gains in government jobs. Manufacturing payrolls rose by the most since 2023, while construction firms added the most jobs since January. Many economists have pointed to the ongoing data-center buildout as a driver of demand for construction labor this year. Local government education added about 42,000 jobs following outsize cuts in July. This category can be volatile in the summer as many teachers fall off of payrolls before returning again as the school year begins.
While the monthly report points to resilience, ADP Research data showed companies added jobs at a more moderate pace in August, indicating a potential slowdown in hiring momentum. Job openings edged higher in July and layoffs fell, suggesting demand for workers remains stable at a subdued level. This low-hire, low-fire mode contrasts with the robust headline numbers and creates a picture of a labor market that is cooling but not collapsing.
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Wage Growth Slows, Participation Rises
The participation rate — the share of the population that is working or looking for work — edged up to 61.6% in August, marking the first improvement in almost a year. The increase was concentrated among younger and older workers, while participation for those ages 25 to 54, also known as prime-age workers, was unchanged at 83.4%. An increase in average hours worked to the highest in more than two years helped lift weekly pay, which could support consumer spending in the months ahead.
Average hourly earnings rose 0.3% from July and 3.1% from a year earlier, the slowest pace since 2021. This deceleration in wages often precedes a decline in the unemployment rate, as seen in historical trends where tightening labor markets eventually lead to lower hiring. The combination of steady wages and rising participation suggests the labor market is shifting from the overheating phase of the recovery toward a more normalized state.
