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Employers added 142,000 jobs in August, as labor market cools The unemployment rate fell to 4.2 percent, tempering recent fears about a rise in joblessness that could signal the start of a downturn.

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 The August jobs report brought mixed news. Unemployment fell, but hiring wasn’t as strong as expected.

The US economy added fewer jobs than economists estimated last month: 142,000 nonfarm payroll jobs compared with expectations of 161,000, according to fresh data released Friday by the Bureau of Labor Statistics. Even so, the US unemployment rate declined, falling to 4.2% from 4.3% in July, in line with Wall Street estimates.



The report represents the final piece of economic data the US Federal Reserve will consider at its meeting later this month when it is widely expected to cut interest rates by at least a quarter of a percentage point. The only question now is whether the Fed will go bigger.

Banks had eagerly awaited Friday’s report, hoping it would show a weaker jobs market to support a larger cut of 0.5%, which should encourage more borrowing and boost Wall Street dealmaking.

If the Fed does decide to trim rates at its Sept. 17-18 meeting, as Chair Jerome Powell has indicated, it would be the first cut since March 2020, when pandemic-era lockdowns tanked the global economy. About 60% of economists expect the central bank will make the more modest quarter-point trim, while the rest anticipate a half-point cut.

In the report, the Labor Department revised July’s hiring data down from the previously reported 114,000 new jobs to 89,000. It also revised June’s figure down from 179,000 new jobs to 118,000. The movements align with other revisions in the last year but indicate the jobs market is consistently worse than the BLS’s initial data.

Here are five key takeaways from the US employment report for August, released Friday:

  • Nonfarm payrolls rose by 142,000, which marked an acceleration from July but was notably less than the 165,000 median forecast in Bloomberg’s survey. – and there was a cumulative 86,000 reduction in payroll increases for the prior two months.
  • The unemployment rate dipped to 4.2%, as expected, with the household survey showing a pickup in employment growth and an expansion in the size of the labor force, where the participation rate held at 62.7%. The unemployment rate for Black Americans fell in August, while that for White people held steady and the jobless rates for Asian and Hispanic people climbed.
  • Pay gains beat forecasts, with average hourly earnings rising 0.4% compared with a 0.3% median estimate. The year-on-year earnings increase was 3.8%, picking up from the slowest pace in more than two years in July. Average hours worked also ticked higher, to 34.3 from 34.2.
  • Private-sector services employers drove payroll gains in August, with leisure education, and health services as the main contributors. Government jobs also increased, while payrolls at manufacturers declined.
  • Interest-rate futures showed traders amping up bets on a 50 basis-point interest-rate cut by the Fed at this month’s meeting, and two-year yields were down about 4 basis points as of 9:24 a.m. in New York, at 3.70%. Stock futures erased losses, and contracts on the S&P 500 were up 0.1%. The dollar dipped.


  •  Traders see the Federal Reserve starting a round of interest rate cuts this month with an upsized 50 basis point reduction after a government report showed the unemployment rate eased to 4.2% in August. Still, employers added fewer workers than economists had expected in both August and July.
    Traders now see a 55% chance that the Fed will cut its policy rate, now in the 5.25%-5.50% range, to a 4.75%-5% range at its upcoming meeting on Sept 17-18. Before the report they had seen about a 43% chance of that outcome, favoring instead a quarter-point reduction.
  •  The current state of the labor market suggests a slowdown, with businesses showing reluctance to hire amid concerns about interest rates impacting investment and uncertain consumer demand. In August, employers added 142,000 jobs, below expectations for the second consecutive month, with revised downward totals for June and July. The unemployment rate decreased to 4.2 percent despite the weaker job growth. Average hourly earnings increased more than anticipated, rising 0.4 percent in August and 3.8 percent from a year earlier, indicating some positivity. The labor force participation rate for individuals aged 25 to 54 slightly decreased in August after hitting a high in July. The spike in July's unemployment rate was attributed to temporary layoffs, which returned to normal levels in August. However, a broader measure of underemployment rose to 7.9 percent in August, the highest since October 2021. While sectors like health care, food services, and construction saw job growth, manufacturing experienced job losses. The Federal Reserve is closely monitoring these developments, with plans to lower interest rates in mid-September to support the labor market, as stated by Fed Chair Jerome H. Powell.  

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