U.S. employers added 162,000 jobs in August, far above forecasts, while unemployment held at 4.1%, the Bureau of Labor Statistics reported Friday. The unexpectedly strong rebound after a weak summer shifted investors' attention back toward inflation and increased expectations that the Federal Reserve could raise interest rates at its September 15-16 meeting.
The government said August payroll growth exceeded the average monthly gain of 31,000 during the previous 12 months. It also revised June employment upward to 31,000 and July employment to 21,000, adding a combined 55,000 jobs to earlier estimates. The labor-force participation rate edged up to 61.6%, while the number of people working part time for economic reasons fell by 414,000 to 4.4 million.
Restaurants and bars led hiring with 59,000 jobs, and local government education added 42,000, largely reversing its July decline. Manufacturing continued to trend higher with 16,000 additional positions, health care added 13,000, and construction changed little with a gain of 22,000. The information sector moved in the opposite direction, cutting 23,000 jobs across data services, publishing and broadcasting.
Average hourly earnings increased by 10 cents to $37.75, up 0.3% from July and 3.1% from a year earlier, according to the BLS. The average workweek rose by 0.1 hour to 34.4 hours. AP reported that the annual wage increase was the weakest since May 2021, leaving household purchasing power exposed if energy-driven inflation continues to run faster than pay.
Financial markets treated the hiring surprise as raising the risk of tighter monetary policy. Reuters reported that traders priced a 58.4% probability of a quarter-point Federal Reserve increase, up from 49.4% a day earlier. The S&P 500 fell 0.38%, the Dow lost 0.51% and the Nasdaq declined 0.29%, while AP said the two-year Treasury yield climbed to 4.37%.
The report presents a stronger labor market but not a uniform boom: job creation remains concentrated in several sectors, and information employment weakened. Federal Reserve officials will now weigh the hiring data against consumer and producer inflation figures due next week. The September jobs report is scheduled for October 2, when revised estimates will provide another test of whether August marked sustained acceleration or a temporary rebound.
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