The labor market appears to be stalling.
The economy added only 22,000 jobs in August, well below the number that forecasters had expected. That suggests employers’ appetite for new recruits has faded markedly in the last several months.
The unemployment rate rose very slightly to 4.3 percent, and wages grew at 3.7 percent over the past year, the lowest growth since July 2024.
The economy has been cooling since its red-hot pandemic peak in the face of high interest rates, and has more recently been buffeted by a barrage of tariffs and other disruptive economic policies from the Trump administration.
With revisions, the labor market now appears to have lost 13,000 jobs in June, the first negative number since December 2020. In total, numbers for the previous two months were revised down by 21,000 jobs.
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Single point of growth: The only sector adding significant jobs was health care, at 31,000 jobs. Almost every other industry subtracted jobs, including manufacturing, which dropped 12,000 positions, and has lost 78,000 positions over the year.
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Federal drag: Once a tailwind for employment, the ongoing firings in the federal government have been subtracting more than 10,000 jobs per month this year and 15,000 in August. The losses could mount in October, since many workers took a deal to be paid through the end of September.
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More people looking for work: The unemployment rate appears to have risen — slightly — for what economists sometimes call the “right” reason. The labor force participation rate for people in their prime working years, between age 24 and 65, rose to 83.7 percent. It reached a post-Covid high of 83.9 percent last year.
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No hire, no fire: While job growth has slowed, employers also haven’t been laying people off in large numbers. For those who do find themselves without a job, however, finding another is proving more difficult. The number of people with continued unemployment claims has been elevated since April.
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Fed outlook: This report solidifies the case for the Fed to restart interest rate cuts in September, as was widely expected ahead of this report.
Lydia DePillis reports on the American economy for The Times. She has been a journalist since 2009, and can be reached at [email protected].
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