The U.S. economy added 22,000 jobs in August -- well below expectations.  Economists had expected a number closer to 80,000.

Washington

The US economy added just 22,000 jobs last month, according to a new Labor Department report, with most gains in health care. Unemployment rose to 4.3%, the highest level since 2021, and job growth has now been weak for four consecutive months. Manufacturing and government sectors lost jobs, and manufacturing has shed 78,000 jobs this year. The report also included revisions, showing June's numbers were worse than initially reported, while July saw a slight improvement. 

Economists note that while inflation and income growth remain solid, the labor market is showing signs of weakness. Factors such as trade and immigration policy uncertainty, as well as rising input costs due to tariffs, are contributing to cautious hiring, particularly in manufacturing. The weak report has increased expectations that the Federal Reserve may lower interest rates, a move supported by the president, who has criticized the Fed chairman for not acting sooner.

Breaking down the August jobs report that has economists talking

It is getting harder and harder to find a job, because the economy is creating fewer and fewer of them. Only 22,000 last month, most of them in health care. All this, according to a report today from the Labor Department. You may recall the last negative report a month ago cost the commissioner of the Bureau of Labor Statistics her job. The president fired her, leaving it to the acting commissioner to preside over today's report, which also shows unemployment ticking up to 4.3 percent. The highest since 2021. The weak jobs numbers mean there is a stronger chance the Federal Reserve will lower interest rates later this month, which the president has been demanding. Shortly after the report came out today, Mr. Trump lashed out at the Fed chairman, calling him Jerome too late Powell. Kelly O'Grady is here now to put the report in perspective. And Kelly, the numbers were even lower than we expected. And that's right. And I think the takeaway is the labor market is continuing to slow down. An unemployment rate of 4.3 percent, it's still considered healthy. But we've now seen four straight months of weaker job growth. The U.S. economy added 22,000 jobs in August, well below expectations. Some sectors fared better than others. Health care and social services continued to grow, while the government and manufacturing sectors lost jobs. Manufacturing is down 78,000 total jobs this year. The report also delivered revisions to past months. The June number was revised to show the economy actually lost jobs for the first time since 2020. July, however, was adjusted up slightly. Kevin Hassett is the director of the National Economic Council at the White House. Inflation is low and economic growth is solid. Income growth is solid as well. So that the only part of the data that's disappointing is that the jobs numbers have been a little bit lower over the last three or four months. Revisions are common, and August numbers are often adjusted up. But today's jobs report highlights the growing weakness in the labor market. From January to April, the economy added over 120,000 jobs on average each month. The last four months, under 30,000. So Kelly, we know the what, but why is this happening? Well, if you're a business and you're facing uncertainty, you're not going to go out there and hire a ton. You're going to pause. And you're looking at trade policy changing, immigration policy changing, consumer sentiment. And I think manufacturing is a really good example of this. As I mentioned, we lost jobs over the past year. That's something, by the way, that's been happening since 2023. But you have manufacturers right now faced with tariffs on steel and aluminum, which are big inputs. And so they're saying, well, I'm not going to go hire a ton when I've got costs going up. I will note, though, we haven't seen mass firings, and that's a really important point. I don't want people to panic right now. We heard the president blasting Jerome Powell once again today. How do we expect the Fed to react to today's news? They get a green light to cut come September. And I think, Chair, Jerome Powell is going to face questions of, did you wait too long to cut? And you saw some of the uneasiness in the market today. It sort of shot up when investors were saying, oh, we're going to get a rate cut because of this jobs number. But then that uneasiness, the investors that I'm talking to are saying, maybe we should have a bigger cut than a quarter point. Maybe we waited too long. We shall see.

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Breakdown