NCS
By Alicia Wallace, NCS
(NCS) — The US job market is stalling out.
Job growth slowed to a crawl in August, and the unemployment fee rose to its highest level in almost 4 years, indicating the US labor market is rising stagnant.
The economy added just 22,000 jobs final month and the unemployment fee rose to 4.3% from 4.2%, in accordance to the Bureau of Labor Statistics.
August’s job report additionally included a downward revision to June, which confirmed the US economy misplaced 13,000 jobs that month. It’s the primary adverse employment month since December 2020, and it brings to an finish what was the second-longest interval of employment enlargement on document.
“The Great American jobs machine has stalled,” Christopher Rupkey, chief economist at FwdBonds, wrote in commentary issued Friday.
July’s job positive aspects have been revised up barely to 79,000 from 73,000, in accordance to the report.
Economists have been anticipating that the economy added 76,500 jobs final month and that the unemployment fee rose to 4.3%, in accordance to FactSet.
The Dow rose 119 factors, or 0.26%, Friday morning. The S&P 500 rose 0.41% and the tech-heavy Nasdaq gained 0.63%, after the weaker-than-expected jobs information boosted expectations that the Federal Reserve will minimize rates of interest in September to stimulate the economy.
Uncertainty stymies hiring
Through August, month-to-month job positive aspects common 74,750, BLS information exhibits. Excluding the pandemic, that’s the slowest common month-to-month acquire for that January to August timeframe since 2010, when the United States was nonetheless licking its wounds from the Great Recession.
“The addition of just 22,000 jobs in August, along with net downward revisions of previous months, shows an economy straining under the immense economic uncertainty and significant policy changes of 2025,” Laura Ullrich, Indeed’s director of financial analysis for North America, wrote Friday.
Uncertainty has swelled since the start of the yr in massive half round how President Donald Trump’s sweeping insurance policies on tariffs, immigration and federal spending would shake out via the economy.
Hiring efforts, already stymied in half by still-high rates of interest, have been largely shelved due to the unknowns.
“They don’t know where things are going, whether it’s through tariffs or other dynamics – interest rates still aren’t coming down – so I think a lot of companies are just saying, ‘not now,’” Ron Hetrick, senior labor economist at employment analytics firm Lightcast, informed NCS in an interview. “I think there’s somebody probably out there who’d like to hire, but not in this environment.”
“They’re waiting for more certainty to occur,” he mentioned.
Narrow job growth means fewer alternatives
The low-hire, low-fire setting is leaving staff and job hunters with few alternatives.
And extra staff are looking for these alternatives, as labor market re-entrants helped to elevate the unemployment fee final month.
The labor drive, which shrank for 3 months in a row, elevated by 436,000 individuals in August, in accordance to BLS information. The labor drive participation fee moved greater as effectively, ticking up to 62.3% from 62.2%.
While the vast majority of these labor drive positive aspects have been from these labeled as employed, the rise in these unemployed was largely attributed to those that re-entered the labor market and are trying to find jobs.
“In fact, the median time looking for work slipped to a three-month low, a bright spot in a generally weak jobs report,” Jennifer Timmerman, senior funding technique analyst at Wells Fargo Investment Institute, wrote in a notice to traders Friday.
A low-churn labor market places the US labor market — and the broader economy — at better threat, economists warn.
The restricted job positive aspects are also coming from virtually a single supply, exacerbating these considerations.
The US job market is being propped up primarily by ongoing employment positive aspects in the well being care trade. That sector, which has attributed for the lion’s share of general job growth this yr, added 46,800 jobs in August.
That sector, nevertheless, accounts for just 15% of whole employment, that means many individuals are left on the sidelines.
“For 85% of workers, they’re not seeing a lot of the jobs added,” Kory Kantenga, LinkedIn’s head of economics Americas, informed NCS this week.
And wage positive aspects are more and more rising softer. The annual growth fee of common hourly earnings slowed to 3.7% in August, from 3.9% in July.
Without broader-based employment growth, the labor market is extra susceptible to shocks, he mentioned.
“If anything happens to that industry, you could easily see job growth fall off a cliff.”
Warning indicators have been flashing for months that the job market has been losing steam. That turned starkly clearer in July, when weak job growth and larger-than-typical downward revisions spurred the unprecedented firing of BLS Commissioner Erika McEntarfer by President Donald Trump who claimed, with out proof, that the disappointing information will need to have been “rigged.”
Other labor market information launched thus far this week additional confirmed that the labor market has cooled down significantly: Private-sector hiring slowed sharply; preliminary jobless claims hit a virtually three-month excessive; layoff bulletins picked up; and, for the primary time in 4 years, the number of available jobs was lower than the number of job seekers.
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NCS’s John Towfighi contributed reporting.