The U.S. economy added only 22,000 jobs in August, a sharp slowdown from July’s 79,000, as hiring continues to weaken under the weight of high interest rates and uncertainty surrounding President Donald Trump’s economic policies. The Labor Department reported Friday that the unemployment rate rose to 4.3 per cent, the highest level since 2021 and worse than economists had forecast.
Factories cut 12,000 positions last month, marking a fourth straight month of losses in manufacturing. Construction shed 7,000 jobs, while the federal government trimmed 15,000. Revisions to previous months revealed an even bleaker picture: June and July payrolls were reduced by 21,000 jobs, with June now showing a loss of 13,000—the first monthly decline since December 2020.
Average hourly earnings increased 0.3 per cent from July and 3.7 per cent year-over-year, broadly in line with forecasts and consistent with the Federal Reserve’s inflation target. But the overall trend shows a labour market losing momentum, pressured both by the lingering effects of the Fed’s 2022–23 rate hikes and Trump’s escalating trade battles.
The slowdown has already sparked political drama. After July’s weak report, Trump dismissed Erika McEntarfer, head of the Bureau of Labor Statistics, and accused her without evidence of rigging data against him. He has since nominated partisan economist E.J. Antoni to lead the bureau, though acting commissioner William Wiatrowski currently oversees the reports. Economists have stressed confidence in the integrity of the data despite the turmoil.
So far this year, healthcare and social assistance have accounted for nearly 80 per cent of all private-sector job gains, underscoring the fragility of hiring elsewhere. Meanwhile, job cuts continue to mount—892,000 have been announced through August, already surpassing last year’s total.
“The labour market is showing signs of cracking,” said Heather Long, chief economist at Navy Federal Credit Union. “It’s not a red siren alarm yet, but the signs keep growing that businesses are starting to cut workers.”