August job boom more than triples expectations, after anemic June and July

By Courthouse News Service

Catching economists completely by surprise, the August employment report showed the U.S. economy added 162,000 jobs, well above the roughly 50,000 many had predicted.

The report is a far cry from the 23,000 jobs reported lost in July’s report, though revisions brought that month’s totals into positive territory, with 21,000 jobs gained. June’s report was also revised up by 11,000 for a total of 31,000 positions.

The unemployment rate held steady at 4.1%, as the labor market continues its “no hire, no fire” approach.

“The swings back and forth in the job market data are giving a sense of whiplash, where a good report is followed by a bad reports is followed by a good report,” Daniel Zaho, chief economist at Glass Door, wrote in an investor’s note.

He noted the volatility in recent employment data “may be the result of slower labor force growth settling the job market into slower jobs growth, where it only takes a small swing to flip from positive to negative or vice versa.”

One of the main drivers in the reversal was 42,000 jobs added to local government, after the 53,000 jobs reported lost in that category in July. However, the total employment in local government remains essentially unchanged since January of last year.

Most sectors saw gains, with restaurants and bars netting a 59,000-job increase, while manufacturing gained 16,000. Healthcare continued to add with 13,000 jobs, though at a slower pace than the previous several months, as did construction, with 22,000 jobs gained.

Earlier in the week, the private payroll report from ADP disappointed, with just 38,000 jobs added last month, several thousand fewer than expected and the slowest pace of job creation in 2026.

Companies with more than 500 employees nabbed nearly all the job gains, accounting for 34,000 positions, while hiring at mid-sized companies remained flat.

Education and healthcare services stood out with 45,000 jobs gained, followed by leisure and hospitality at 16,000 jobs added. However, manufacturing and professional services shed 17,000 and 16,000 positions, respectively.

Wage growth has also begun to tighten, with those changing jobs noting a 4.7% increase in base pay. Those who stayed saw just a 3% increase.

“Pay can tell us a lot about today’s choppy hiring,” Nela Richardson, ADP’s chief economist, said in a statement. “Once predictable wage growth has been overtaken by the complexities of demographic change, persistent inflation and AI’s effects on jobs.”

The number of openings hasn’t changed much, particularly among white collar jobs. Hiring also declined in several industries, according to the most recent JOLTS report, while the “quits rate” declined slightly.

The labor participation rate in the federal jobs report also has continued to drop, declining 0.7% since January.

The “no hire, no fire” labor landscape has been felt keenly by smaller companies. The National Federation of Independent Business jobs report found nearly one-third of owners have job openings they cannot fill, 11 points above the survey’s historical average. Only 17% of small businesses surveyed said they plan to create new jobs in the next three months, three points lower than July.

“Small businesses are slowing down their hiring efforts as the summer comes to an end, with fewer owners reporting job openings or plans to create new positions,” NFIB Chief Economist Bill Dunkelberg said in a statement. “The pressure to offer competitive wages is still high, but it’s no longer a top challenge for most Main Street employers.”