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The August jobs report revealed a significant slowdown in hiring, with the U.S. economy adding only 22,000 jobs, according to the Bureau of Labor Statistics (BLS). This figure fell well short of economists' expectations of 76,500 new jobs. The unemployment rate rose to 4.3%, marking its highest level since October 2021.
The report also included a downward revision for June, which turned a previously reported gain of 14,000 jobs into a loss of 13,000, ending the second-longest period of employment expansion in U.S. history. The professional and business services sector experienced the most significant job losses, shedding 17,000 positions, while the government and manufacturing sectors also saw declines.
Despite the overall weak performance, the health care sector continued to add jobs, contributing 31,000 positions in August. This sector remains a key driver of job growth, accounting for a large portion of the overall employment gains this year.
The sluggish job growth has increased expectations for a Federal Reserve interest rate cut later this month. Traders are now pricing in a 100% chance of a quarter-point cut, with some even anticipating a half-point reduction. The Federal Reserve has not adjusted rates since December 2024, but the current economic climate has intensified pressure on the central bank to act.
The report comes amid ongoing political controversy, as President Donald Trump recently fired former BLS Commissioner Erika McEntarfer, accusing her of manipulating data without evidence. Acting Commissioner William Wiatrowski is currently overseeing the BLS. The president has nominated E.J. Antoni, a Heritage Foundation economist, to fill the role permanently.
The labor market's slowdown, combined with rising unemployment rates, signals potential challenges ahead for the U.S. economy. Economists and policymakers will closely monitor these developments as they consider future economic strategies.