U.S. August payrolls jump 162,000, unemployment stays at 4.1%
Nonfarm employment rose by 162,000 in August, far exceeding expectations, while the unemployment rate held at 4.1%, prompting renewed speculation about a Federal Reserve rate hike.
The Labor Department reported that nonfarm payrolls increased by a seasonally adjusted 162,000 in August, the strongest monthly gain since March and well above the 53,000 forecast of Dow Jones economists. The unemployment rate remained unchanged at 4.1%, a modest decline from a year earlier.
Broad-based hiring drove the increase, led by 59,000 jobs in restaurants and bars, 42,000 in government education, and 16,000 in manufacturing. Health-care added 13,000 jobs, below its 12-month average of 32,000, while information-related industries shed 23,000 positions, reflecting a 12-month loss trend.
Average hourly earnings rose 0.3% in August, matching expectations, and the annual wage growth of 3.1% edged 0.1 percentage point above forecasts.
"An upside surprise in payrolls will likely ramp up concerns about a rate hike, but that outcome is in the hands of next week's inflation numbers," said Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management.
Traders now assign roughly a 58% probability to a 0.25-percentage-point rate increase at the Federal Open Market Committee meeting on Sept. 15-16, according to the CME Group's FedWatch tool. Recent comments from Fed officials, including Governor Christopher Waller and New York Fed President John Williams, suggest a more cautious stance, with many indicating they would hold rates steady if inflation shows continued moderation.
The report also noted a 0.2-percentage-point rise in the labor-force participation rate, keeping the jobless count steady despite the higher participation. An alternative unemployment measure, which includes discouraged workers and part-time workers for economic reasons, fell to 7.7%, its lowest level since June 2025.
Revisions to prior months added to the positive outlook: July's employment gain was revised up by 21,000 jobs, and June's was increased by 11,000. The upcoming Bureau of Labor Statistics releases on producer and consumer prices will further shape expectations for monetary policy.