Hiring burst of 162,000 jobs in August puts the focus squarely back on inflation in the U.S.
Updated: , 2026
WASHINGTON — The U.S. job market rebounded in August as employers added a surprising 162,000 jobs. The unemployment rate stayed at a low 4.1 per cent.
The jobs report, issued by the Labor Department Friday, could be good news for U.S. President Donald Trump two months before midterm elections in which the health of the economy is weighing on voters’ minds.
Hiring far exceeded the 65,000 forecasters had expected, according to a poll by FactSet. Labor Department revisions also looked good, adding 55,000 to June and July payrolls. Employers created 21,000 jobs in July; the Labor Department had originally reported that they’d cut 23,000.
Restaurants and bars added 59,000 jobs last month, construction companies 22,000 and manufacturers 16,000. Factory jobs are up by 58,000 since hitting a recent low in December, the Labor Department noted.
So far this year, employers — companies, government agencies and nonprofits — have added an average of more than 80,000 jobs a month. That is up from a dismal 9,700 last year.
But hiring remains well below the 166,000 monthly jobs that were the norm in 2023 and 2024, let alone the 491,000 a month recorded during the 2021-2022 hiring boom that followed pandemic lockdowns.
And the U.S. labor force — the number of people working or looking for work — jumped by 683,000 last month after falling in June and July.
Yet many households are struggling with the high cost of living, and wage gains aren’t helping much. Average hourly wages rose 3.1 per cent last month from a year earlier, the weakest year-over-year increase since May 2021.
Friday’s report may increase the likelihood that the Federal Reserve will raise its key short-term interest rate when it next meets Sept. 15-16. Solid hiring sends a signlal that current borrowing costs aren’t necessarily high enough to restrain the economy and cool inflation.
Fed Chair Kevin Warsh said last week that inflation, at 3.7 per cent according to the Fed’s preferred measure, remains too far above the central bank’s 2 per cent target, and added that without further progress, they would have “work to do.”
With hiring seemingly healthy, the Fed’s focus will shift to a critical inflation report that is being released next week. On Thursday, Fed governor Christopher Waller said he is leaning toward keeping the Fed’s rate unchanged, but would support a hike if inflation comes in high.
Contributing to inflation is the struggle that U.S. employers have had dealing with a shortage of workers — the result of President Donald Trump’s immigration crackdown and the retirement of baby boomers. Some are responding by using technology for tasks that human beings used to do.
Employers have been reluctant to let go of the staff they have, so most Americans enjoy unusual job security and unemployment is low.
“It’s a very strange labor market,’’ David Kelly, chief global strategist at J.P. Morgan Asset Management, wrote in a commentary Monday.
The No. 1 puzzler: Hiring is weak, but layoffs are rare.
Employers haven’t been eager to take on new workers. The Labor Department reported Tuesday that gross hiring — before subtracting people who lost or left their jobs — fell 5 per cent to fewer than 5.1 million new jobs.
The United States doesn’t need as many jobs as it did until recently to keep the national unemployment rate from rising. Trump’s immigration crackdown and baby boomer retirements mean fewer people are available for work. More than 1.3 million people have dropped out of the U.S. labor force over the past year.
As a result, the “break-even’’ rate of monthly hiring, 155,000 in 2023-2024, has dropped, perhaps to nearly zero, according to a Federal Reserve study.
Instead of looking to hire from a diminished pool of available workers, “businesses are increasingly focused on boosting efficiency through technology and AI and increasingly seek to do more with their existing workforce,’’ EY-Parthenon economists Gregory Daco and Lydia Boussour wrote in a commentary this week.
Even if they aren’t hiring aggressively, companies are reluctant to let go of the staff they have. They retain memories of the unexpected labor shortages that followed the end of COVID-19 lockdowns.
So unemployment remains low. For the past year, the number of people applying each week for unemployment benefits - a proxy for layoffs - has stayed in a historically low range of around 200,000 to 230,000.
The result is what economists call a “no-hire, no-fire″ labor market in which those who have work enjoy job security, but times are tough for young workers trying to land entry-level jobs or unemployed people seeking to get back to work.
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Paul Wiseman, The Associated Press
