The US labour market saw an increase of 162,000 new jobs in August. Despite this rise in employment, the national unemployment rate remained constant at 4.1 per cent. According to the monthly labour market report from the U.S. Bureau of Labor Statistics (BLS), published on Friday, the largest gains occurred in the hospitality sector and municipal education.
Wage growth, however, showed signs of slowing; average hourly earnings rose by only 3.1 per cent year-on-year in 2026. These employment figures exceeded analysts' expectations, who had predicted a gain of approximately 55,000 jobs for August following the decrease of 23,000 jobs in July, according to the CME Group. The unemployment rate for August had even been estimated at 4.2 per cent.
Sam Williamson, Senior Economist at First American Financial, noted that the labour market ended the summer with unexpected momentum, dispelling concerns about labour market weakness. He suggested that this could prompt the Federal Reserve to raise interest rates, provided inflation persists. The robust report should allay any remaining Federal Reserve concerns about a weakening labour market, which argues for an interest rate hike at the Fed meeting in two weeks. Next week's inflation report is likely to be the decisive factor.
In August, the number of jobs in the food and beverage sector increased by 59,000 positions, a significant rise compared to the average monthly gain of 12,000 jobs over the preceding twelve months. The 42,000 education jobs newly created in August were seen by the BLS as compensating for job losses in this sector in July. The 'Information' sector, which the BLS uses to describe tech industry jobs, however, recorded a loss of 23,000 jobs in August. This represents a substantial increase compared to the average loss of 8,000 jobs per month over the last twelve months.
The service provider ADP also published its own report on Friday, showing that its clients alone created 38,000 jobs. Employees who remained with their current employer recorded a wage increase of only 3 per cent, compared to 4.7 per cent for those who changed employers. Basic remuneration in the US decreased by 3.2 per cent in August, after already experiencing a decline of 3.3 per cent in July, according to ADP data.
ADP interprets this wage data as a potentially more insightful indicator of the labour market's health. Nela Richardson, Chief Economist at ADP, stated that wage development can say a great deal about current, volatile hiring practices. To understand hiring patterns, one must carefully observe where wage growth is picking up, where it is slowing down, and for whom. The once predictable wage growth has been overshadowed by the complexity of demographic change, persistent inflation, and the impact of artificial intelligence on jobs.
