August Jobs Report Delivers Unexpectedly Strong News for U.S. Economy

What the Jobs Report Shows

The U.S. economy added a surprising 162,000 jobs in August, the Labor Department estimated Sept. 4, even as economists said a “low-hire, low-fire” dynamic made it difficult for unemployed Americans to find work.

The 162,000 estimate for August far surpassed forecasters’ expectations and marked a rebound after U.S. employers added a now-revised 21,000 jobs in July. The department previously estimated U.S. employers shed 23,000 jobs in July. Payroll gains for June were also revised higher, reflecting a stronger summer job market than previously thought.

The unemployment rate stayed put at 4.1% in August after falling in June and July, when hundreds of thousands of Americans stopped looking for work. The labor force participation rate ticked up to 61.6% in August after falling to 61.4% the month before.

“There are always areas of concern in the labor market. For example, among recent graduates,” Federal Reserve Chair Kevin Warsh said Aug. 28. “In general, though, people who want to work, by and large, are holding or finding jobs. They may well be concerned about future labor disruptions, but as of now, I believe the labor markets are broadly consistent with full employment.”

Average hourly earnings for employees on private, nonfarm payrolls rose by 10 cents to $37.75 in August, the department said. They increased 3.1% over the year. The department’s next inflation report, due out Sept. 11, will reveal whether paychecks kept up with inflation in August. They did not in July.

Fed officials will review the new employment numbers for August and the upcoming inflation report as they prepare for their next interest rate decision on Sept. 16. Several policymakers have signaled they may support a rate hike if the report shows inflation is not on a path back to the central bank’s 2% annual target.

“We believe today’s report further confirms that policymakers will remain focused on the inflation side of their mandate,” Edward Jones investment strategy analyst Brock Weimer said in a note to USA TODAY. “While August inflation data will likely play a key role in shaping the Fed’s decision later this month, and a rate hike is far from a foregone conclusion, we believe policymakers will show limited tolerance for upside inflation surprises.”

Which Industries Are Hiring?

U.S. employers added 162,000 jobs in August, the highest monthly total since March this year.

The unemployment rate remained unchanged at 4.1%.

A boost in food services and drinking places employment drove the payroll gains. The sector added 59,000 jobs in August.

Not far behind was local government education, which added 42,000. The construction sector added 22,000 roles, and the manufacturing industry gained 16,000 jobs. The health care sector added 13,000, a number that still represents growth but is lower than its average monthly gain of 32,000 over the past year.

Employment in the information industry fell by 23,000 in August. It was little changed in other sectors, including social assistance, financial activities, and professional and business services, the department said.

“Taken together, the data point to a stable labor market, not an accelerating one,” LinkedIn’s head of economics for the Americas Kory Kantenga said in a note to USA TODAY. “The strong gains in Leisure and Hospitality and Government are a rebound from earlier summer weakness, not a shift in trend. Do not expect a repeat.”

ADP’s National Employment Report, released Sept. 2, offers another look at the U.S. labor market. It found private employers added a much lower 38,000 jobs in August.

According to the ADP report, the education and health services sector added 45,000 roles, leisure and hospitality gained 16,000, and construction added 12,000 in August. It found employment in the financial activities sector increased, but employment declined in professional and business services, trade, transportation and utilities, and the information sector.

How Is the U.S. Job Market Overall?

Warsh and other Federal Reserve officials described the U.S. labor market as “stable” in August. Across the Fed’s 12 districts, three experienced “modest” gains, four showed “slight” gains, and five showed no change in employment since early July, according to the central bank’s latest Beige Book.

“Things do look overall pretty steady,” Kantenga said in an interview ahead of the report. “That doesn’t mean that they’re good for job seekers.”

Other Labor Department data released Sept. 1 showed the national quits rate changed little from July to August, as workers continued clinging to their jobs in part because they feared they wouldn’t be able to land another. The number of job openings was also little changed in August from the month before, the department said, leaving unemployed workers stuck in a competitive market.

Facing fierce competition and a hiring process being reshaped by artificial intelligence, some job seekers have stopped looking for work entirely. Kantenga said one reason behind past months’ labor force departures could be that Americans are realizing their wages aren’t keeping up with inflation.

“When it comes to people joining the labor force and staying in the labor force, it’s about the incentives,” Kantenga said. “For some people, that’s going to be a better deal to stay home, provide your own childcare rather than going to work and paying for childcare that costs more than your annual salary.”

Where Is the U.S. Job Market Headed?

U.S. employers announced plans to hire 12,325 workers last month, representing a 23% decline from July but marking the highest August total since 2022, according to a Sept. 3 Challenger, Gray & Christmas report.

So far in 2026, companies’ hiring plans have increased 37% compared with the same period in 2025. Industries with the most announced hires in August were aerospace and defense, technology, and industrial goods, the report said.

Employers announced 52,881 job cuts in August, up 58% from July, though the lowest August total since 2022. From January to August, job cut announcements were down 41% compared with the first eight months of 2025.

For the first time since February this year, artificial intelligence was not the top reason companies cited for cuts. Instead, restructuring led all other reasons. Cuts were most common in the consumer products, food and technology sectors.

In projections released Aug. 27, the Labor Department estimated the U.S. economy will add 5.9 million jobs between 2025 and 2035, with total employment growing 3.5%. That’s a much slower pace than the 10.9% growth recorded between 2015 and 2025. The department expects employment in the federal government and retail trade to decline over the next decade, while demand for workers will rise in health care and fields related to the AI buildout.

This is a developing story and will be updated to add new information.