US added 162,000 jobs in August, blowing past expectations

The U.S. economy added 162,000 jobs in August, according to new data released Friday by the Bureau of Labor Statistics (BLS).

The unemployment rate remained unchanged at 4.1 percent. Economists had expected U.S. employers to add 53,000 jobs last month and the jobless rate to hold steady at 4.1 percent, according to The Wall Street Journal.

The August jobs data marked a sharp reversal from July, which initially showed the economy losing 23,000 jobs . However, the BLS revised jobs data from the past two months to show employers added 31,000 and 21,000 jobs in June and July, respectively.

Friday’s numbers “may corroborate that recent softness was temporary rather than indicative of a broader deterioration,” Jerry Tempelman, vice president of economic and fixed income research at Mutual of America Capital Management, said in a statement.

The uptick last month was driven by an increase in employment at food services and drinking places, which rose by 59,000 jobs, and local government education, which added 42,000 jobs, “largely offsetting a decrease in the prior month,” BLS noted.

Federal Reserve Chair Kevin Warsh touted the job market last week, noting unemployment claims — on a four-week average — are “near their lowest level” in decades.

“In my view, the relatively low turnover in today’s labor market is partly a result of the significant rematching between employers and employees that happened at scale in the postpandemic environment,” Warsh said at the central bank’s annual symposium in Wyoming.

“When labor supply is barely growing, monthly job gains are naturally going to run low,” he added.

Economists have pointed to lower net migration rates as a cause of stagnant labor data, as the Trump administration has carried out a widespread deportation campaign . The labor force participation rate has also declined by 0.5 percentage points from January, although it ticked up to 61.6 percent in August, the BLS reported Friday.

“August’s solid job growth is even more notable since the government cancelled Temporary Protected Status for Haitian refugees on July 27, forcing workers who used that status to qualify for authorization to leave the work force,” Bill Adams, chief U.S. economist for Fifth Third Commercial Bank, said in a statement.

With the better-than-expected job numbers, this will focus the Fed “squarely on controlling inflation when they meet next in September,” Adams added.

Federal Reserve board member Christopher Waller said Thursday he anticipated stable unemployment numbers relative to July, noting August inflation data will “heavily” influence his vote on interest rates at the next Federal Open Market Committee meeting in less than two weeks.

As of Thursday afternoon, markets saw about a 50 percent chance the central bank maintains rates at their current level and a 50 percent chance it votes for a quarter-point hike, according to CME’s FedWatch tool . By Friday morning, this shifted to about a 60 percent chance of a hike.

“If there is continued progress toward our 2 percent goal, then I am willing to support holding the policy rate at its current level,” Waller said at a Reuters NEXT event. “But if inflation comes in hot, I would consider a rate hike.”

Inflation has remained stubbornly above the central bank’s target rate of 2 percent. The Fed’s preferred measure of inflation, the personal consumption expenditures price index, stayed flat at an annual rate of 3.7 percent in July.

This coincides with the U.S. gross domestic product (GDP) increasing at an annual rate of just 1.5 percent in the second quarter, according to the Bureau of Economic Analysis (BEA).

Real GDP grew by 2.1 percent in the first quarter, the BEA reported, after rising by less than a percentage point in the final quarter of 2025 and increasing by 4.4 percent in quarter three of last year.

For Fed officials, the labor market “has been one reason they weren’t raising rates more quickly to fight inflation,” noted Chris Zaccarelli, chief investment officer for Northlight Asset Management.

“Although it’s not a given that the Fed will raise rates on September 16th, especially given the optics of a national election less than 2 months after the meeting, there are plenty of reasons to raise interest rates (to fight inflation) and less reasons to keep rates unchanged (to support the labor market),” he added in a statement.