The US added 162,000 nonfarm jobs in August, nearly triple analysts' expectations, following two months of small job gains, in a sign the labor market may be stabilizing.
Job gains were led by hiring in food services, drinking places and local government education, the Labor Department reported.
Employment was revised up to 21,000 jobs added in July following upward revisions of 44,000, while gains were revised up to 31,000 for June on upward revisions of 11,000, for combined upward revisions of 55,000 over the two months, the Labor Department said. Still, job gains for the prior 12 months beginning July averaged just 31,000/month.
"August's pick-up in payrolls looks like payback after two very weak months and the reversal of a seasonal adjustment distortion to education jobs," Pantheon Macroeconomics said in a note. It said seasonal factors used to adjust the raw data was "the most generous since 2015, potentially flattering the headline number."
Food services and drinking places added 59,000 jobs in August, compared with average gains of 12,000 over the prior 12 months. Local government education added 42,000 jobs.
Manufacturing added 16,000 jobs last month and is up by 58,000 from a recent low in December 2025. Health care added 13,000 jobs, about a third the pace of the last 12 months.
Information technology shed 23,000 jobs, following average monthly losses of 8,000 over the prior 12 months. Construction added 22,000 jobs in August, following recent gains that were largely linked to data center buildouts, according to Pantheon.
"AI likely is continuing to dissuade businesses in a wide range of sectors from adding to staff numbers for now," Pantheon said.
The unemployment rate remained unchanged at 4.1pc, the Labor Department reported. Average hourly earnings slowed to an annual 3.1pc in August from 3.2pc the prior month, showing wage gains are trailing inflation.
The labor participation rate ticked up to 61.6pc last month from 61.2pc the prior month, which was the lowest since the Covid-19 pandemic. The measure tracks those employed and actively looking for work and has been weakened by discouraged workers leaving the labor force, retirements and a smaller immigrant workforce, partly linked to government expulsions and crackdowns.
The CME's FedWatch tool showed about 57pc odds of a rate hike Friday at the Fed's next policy meeting later this month, up from about 53pc odds on Thursday, as signs the labor market is strengthening helps it focus on rising inflation pressures linked to the Mideast Gulf war.
By Bob Willis
