By Jeffry Bartash
Jobless rate climbs to 4.3% – highest since 2021- as economy generates just 22,000 jobs, less than a third of the consensus forecast
The economy added a skimpy 22,000 new jobs in August and the unemployment rate rose to a nearly four-year high, underscoring the increasing fragility of the U.S. labor market.
The fourth subpar employment report in a row all but cements a reduction in U.S. interest rates by the Federal Reserve when officials meet in two weeks. Fed officials have grown worried about a slowdown in hiring.
The increase in employment last month fell short of the 75,000 forecast of economists polled by the Wall Street Journal.
The unemployment rate inched up to 4.3% from 4.2%, reaching the highest level since late 2021. For the first time since before the pandemic, there are now more unemployed workers than there are job openings.
The rise in the jobless rate, however, stemmed largely from more people entering the labor force last month in search of employment. The labor force typically expands in August as schools reopen and educational employees return to work.
The U.S. jobs market has weakened considerably in 2025.
Still, businesses have become more hesitant to hire because of softer sales and uncertainty about how much the Trump administration tariffs will cost them.
Many companies are letting open positions go unfilled or are relying on technology such as artificial intelligence instead of adding new workers, surveys of business executives show.
Key details: Very few industries are hiring right now.
Healthcare providers added 47,00 employees, and hotels and restaurants created 28,000 jobs. These two industries have created most of the new jobs in the past year.
The picture was darker in almost every other industry. Employment fell in manufacturing, construction, wholesale, government and professional jobs.
The previously reported 73,000 increase in new jobs in July, meanwhile, was raised to 79,000.
The June estimate was revised to show a 13,000 decline in jobs instead of a 14,000 increase. It was the first drop in employment since the end of 2020.
Unusually large revisions in the employment reports this year have raised questions about the accuracy of the jobs data.
President Donald Trump last month fired the commissioner of the Bureau of Labor Statistics in an unprecedented move and is seeking to install a conservative critic of the agency as its new chief.
The controversial firing has put the BLS under intense pressure at a time when the economy is undergoing great strain due to ongoing trade wars and the highest U.S. tariffs in decades.
Big picture: The jobs market was already cooling before the Trump administration launched the biggest trade conflicts in decades. Hiring has slowed to a crawl as businesses try to figure out how Trump’s tariffs will affect them and the broader economy.
A slate of new tariff agreements with other countries could thaw the partial freeze in hiring. Fed interest-rate cuts might also help. Yet economists say U.S. growth is unlikely to pick up until the current trade wars have faded.
Looking ahead: “The fourth month of subpar employment performance signals a dramatic stall in hiring and fully supports the Fed starting rate cuts at the next meeting,” Nationwide chief economist Kathy Bostjancic said. “The real question now becomes now many rate cuts follow.”
Market reaction: Stocks DJIA SPX opened higher before surrendering that early momentum. The yield on the 10-year note BX:TMUBMUSD10Y was slightly lower.
-Jeffry Bartash
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09-05-25 1026ET
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