US job growth expected to rebound in August; unemployment rate forecast steady at 4.1%

WASHINGTON, Sept 4 (Reuters) - U.S. payrolls growth likely rebounded in August as the drag from local government education reversed, but the anticipated recovery could be limited by job losses related to the termination of Temporary Protected Status for Haitian immigrants.

The Labor Department's closely watched employment report on Friday is expected to paint a picture of ‌a labor market that economists say remains in a "slow hire, slow fire" mode, with the unemployment rate forecast to have held steady at 4.1% last month.

Labor market momentum has decelerated ‌after surging in the spring, partly blamed on the oil price shock and supply chain strains from the U.S.-led war with Iran. Job growth was hobbled by President Donald Trump's sweeping import tariffs in 2025.

"Businesses felt some of the problems from 2025 ​were behind, then all of a sudden we get another black swan event that introduces a new set of uncertainties," said Brian Bethune, an economics professor at Boston College. "We saw significant problems with supply chains, oil and fuel prices went up, and that situation has not changed. So that's why the job numbers have dropped from what we saw in the first few months."

Nonfarm payrolls likely increased by 56,000 jobs last month after declining 23,000 in July, according to a Reuters survey of economists. Estimates ranged from as low as another loss of 25,000 jobs to as high as a 121,000 gain.

August payrolls have a tendency to undershoot expectations, ‌with economists blaming a summer seasonal quirk. Local government education employment dropped ⁠by 49,600 in July, and a rebound was expected to underpin payrolls in August.

A recovery was also anticipated in the leisure and hospitality industry after losing jobs for two straight months.

Economists, however, cautioned that those gains could be offset by the termination of TPS for hundreds of thousands of Haitian immigrants, which impacted ⁠their work permits.

"We are assuming a 15,000 drag on payrolls from the revocation of Temporary Protected Status for unauthorized Haitian immigrants," said Michael Gapen, chief economist at Morgan Stanley. "It could be much larger. The TPS-affected Haitians account for an estimated 160,000 of national payrolls."

The drag, which some economists said could be temporary, would be evident in labor-intensive services sectors like healthcare, mostly care-giving. Some immigrants who lost their TPS could move to ​other ​visa categories.