U.S. job growth weakened sharply in August, adding pressure on the Federal Reserve to cut rates this month. The Labor Department reported that nonfarm payrolls increased by only 22,000. This was a steep drop from July’s revised gain of 79,000.
Economists polled by Reuters expected 75,000 jobs. The August figure came in at less than a third of that forecast. Projections ranged from zero to 144,000. August reports often start weak before later revisions, but the slowdown already worries analysts.
The unemployment rate climbed to 4.3% from 4.2% in July. It marked the highest level since the pandemic recovery. For the first time since COVID-19, more people searched for work than job openings existed. Economists blamed slower hiring on Trump’s tariffs and immigration policies, which reduced the labor pool.
Trump’s tariffs pushed the average U.S. rate to the highest level since 1934. They also fueled inflation fears and delayed the Fed’s rate cuts. A federal appeals court recently ruled that many of those tariffs were illegal, keeping businesses in flux.
The jobs report followed Trump’s firing of BLS commissioner Erika McEntarfer. He accused her of faking data, though he offered no evidence. Economists defended her and explained that revisions came from the “birth-and-death” model. This model estimates jobs created or lost by new and closing firms, and it often drives large changes.
Ernie Tedeschi of Yale’s Budget Lab noted that the labor market shows little churn. “Hiring and firing are both low. Job growth mostly comes from new firm creation. That makes the numbers highly sensitive to revision,” he said.
The BLS will release benchmark revisions next week. Economists expect payroll counts could fall by as much as 800,000. Their estimate is based on employer wage reports in the Quarterly Census of Employment and Wages.
Trump nominated E.J. Antoni of the Heritage Foundation to replace McEntarfer. Antoni has often criticized the BLS and even called for suspending the reports. Economists from across the spectrum say he lacks the expertise for the role.
Fed Chair Jerome Powell recently acknowledged labor market risks. He said the Fed may cut rates at its September 16–17 meeting, though inflation still poses a threat. The central bank has held its benchmark rate at 4.25%–4.50% since December.
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