The US economy added 162,000 jobs in August, nearly triple the 55,000 consensus, wiping out in one print the narrative of a stalled labor market. It is the picture from the Employment Situation report released by the Bureau of Labor Statistics on Friday, September 4, which lands after July's unexpected loss of 23,000 jobs and redraws the scenario ahead of the September 16-17 FOMC meeting.
The report's numbers
- Nonfarm payrolls: +162,000 versus +55,000 expected (the Reuters survey pointed to +56,000)
- Unemployment rate: steady at 4.1% for a second straight month, in line with forecasts
- Labor force participation: up to 61.6% from 61.4%
- Underemployment (U6): down to 7.7% from 7.9%
- Average hourly earnings: +0.3% on the month after July's standstill, in line with expectations; on a yearly basis wage growth slows to 3.1% from 3.2%, though still above the 3.0% consensus
- Average workweek: 34.4 hours, above the 34.3 expected
From -23,000 in July to +162,000: composition matters
The rebound is not just statistics. Private payrolls rose 127,000 versus 45,000 expected (after +30,000 in July), manufacturing added 16,000 against 5,000 forecast, and the public sector turned positive at +35,000 after July's -53,000, which reflected the summer drop in local education employment. The two-month net revision is a positive 55,000, with June confirmed at +57,000.
Unemployment staying at 4.1% reflects labor supply, not weak demand: participation rose from 61.4%, a more than five-year low, reversing the recent trend. As InvestingLive's analysis notes, the jump in participation is exactly what kept the rate at 4.1% instead of pushing it lower.
The print clashes with the week's early signals: on Wednesday ADP had reported just 38,000 private jobs, the slowest pace since January, and consensus expected a moderate rebound driven by teachers returning, after July's 49,600 drop in local government education. A stark divergence between ADP's survey of 26 million workers and the official data. The vacancies picture remains solid anyway: July had 7.3 million open positions, slightly up from June's revised 7.2 million, with 5.1 million hires during the month.
What it means for the Fed
The upside surprise lands as the central bank weighs a rate hike against still-hot inflation: before the report, fed funds futures priced roughly a 50% chance of a September hike and 32 basis points of increases by year-end. A labor market restarting with force strengthens the case for action, while the annual moderation in wage growth (3.1%) plays for those who would rather wait. Fed Chair Kevin Warsh described the labor market in August as "quite stable," reading low turnover as the result of the post-pandemic rematch between employers and employees; Governor Christopher Waller said he would lean toward holding if data shows inflation improving. That makes the September 11 CPI the next critical stop: as Bank of America economist Shruti Mishra wrote this week, prices will decide, because Warsh sees the labor market as solid. A print like this, though, strips the Fed of the labor-weakness argument for standing pat.
Markets
After the release, InvestingLive flagged a strong dollar bid across major currencies: ahead of the report USD/JPY traded at 156.13 and S&P 500 futures gained 2 points, with the full reaction still unfolding at the time of writing.
Sources
