US job creation slowed to a crawl in August, underscoring signs of weakness in the labor market and reinforcing expectations that the Federal Reserve will move ahead with an interest rate cut later this month.
Nonfarm payrolls rose by 22,000 last month, while the unemployment rate increased to 4.3%, the Bureau of Labor Statistics (BLS) reported Friday.
Economists surveyed by Dow Jones had forecast a payroll gain of 75,000.
The August tally marked a sharp pullback from July’s revised increase of 79,000.
Revisions also showed June payrolls fell by 13,000, after an earlier estimate was cut by 27,000.
The latest data reflect a broader cooling trend, with job gains moderating, vacancies declining, and wage growth easing in recent months.
Average hourly earnings increased 0.3% in August, in line with expectations.
On an annual basis, wages rose 3.7%, slightly below the 3.8% forecast.
Sector-level data showed health care led the gains with 31,000 new jobs, followed by social assistance with 16,000.
Hiring was offset by declines in wholesale trade and manufacturing, both down 12,000, while federal government payrolls contracted by 15,000.
Fed policy outlook
S&P 500 Index futures ticked higher Friday after a weaker-than-expected US jobs report strengthened expectations that the Federal Reserve will cut interest rates later this month.
The move comes on the heels of a record close for the benchmark index on Thursday, when softer labor market data added weight to the case for policy easing.
That support helped offset the drag from a run of disappointing earnings reports out of the technology sector.
Despite the weak headline number, markets continued to price in a rate cut when the Fed meets on September 16-17.
Chair Jerome Powell had signaled in August at the Jackson Hole symposium that policymakers were prepared to ease borrowing costs.
Before that meeting, officials will also review fresh consumer price index data.
Political context at BLS
The August report was also notable as the first since President Donald Trump dismissed former BLS Commissioner Erika McEntarfer following July’s weak results.
Trump has nominated economist E.J. Antoni, a Heritage Foundation policy analyst, to succeed her.
In the interim, William Wiatrowski is serving as acting commissioner.
The BLS had warned earlier Friday of “technical issues,” though the report was released on schedule at 8:30 am in Washington.
The latest figures add to evidence of a slowing labor market, which is weighing on broader economic activity.
Whether the August data marks a temporary soft patch or a deeper trend will be a central question for policymakers as they weigh the timing and size of future rate cuts.
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