U.S. companies’ employment fell for the first time in over two years. Photo by Eric Prouzet, Unsplash.

News Release

WASHINGTON — U.S. job growth slowed sharply in August, with employers adding just 22,000 positions as hiring momentum continued to fade under the weight of high interest rates and uncertainty over Pres. Donald Trump’s economic policies.

The Labor Department said the gain was well below economists’ expectations of about 80,000 jobs and marked a steep drop from July’s 79,000. The unemployment rate edged up to 4.3%, the highest since 2021. Revisions also showed payrolls were weaker than previously reported, including job losses in June, the first since the pandemic recovery began.

Factories, construction firms and the federal government all trimmed staff last month, while healthcare and social assistance carried the private sector by adding nearly 47,000 jobs. That category now accounts for the overwhelming majority of employment gains this year.

So far this year, monthly job creation has averaged fewer than 75,000, compared with 168,000 in 2024 and more than 400,000 during the boom from 2021 to 2023. Economists point to both the lingering impact of the Federal Reserve’s 2022–23 rate hikes and fallout from Trump’s tariffs, which have injected uncertainty into corporate planning and slowed hiring.

Average hourly earnings rose 0.3% in August and 3.7% from a year earlier, matching forecasts. The steady wage growth suggests inflation pressures are in line with the Fed’s 2% target.

The weak report makes a rate cut when policymakers meet Tuesday and Wednesday, Sept. 16–17 almost certain. Analysts expect the Fed to begin a series of reductions that could total a full percentage point over the next year.

Trump, who has clashed with Fed Chair Jerome Powell, blamed him again Friday, Sept. 5, for the slowdown, while Democrats accused the president’s trade policies of undermining growth.