New data confirms a broad-based slowdown in hiring as U.S. employers reported adding just 22,000 jobs in August, according to the latest employment report from the U.S. Bureau of Labor Statistics (BLS), released Sept. 5.
Private-sector employment grew by 38,000 jobs, while federal government employment decreased by 15,000 jobs. Employment growth totals for July were revised up by 6,000 to a gain of 79,000 new jobs while June’s figures were revised down from 14,000 new jobs to a 13,000-job loss for the month. That is the first negative jobs report since December 2020.
The unemployment rate ticked up to 4.3% in August from 4.2% the month before. And for the first time since the pandemic, there were fewer job openings than there were job seekers, BLS data showed.
“The latest jobs report provides further evidence that the labor market has cooled much faster over the course of three months,” said Sydney Ross, an economist with SHRM. “Over the year, job gains continue to be concentrated in the health care and social assistance sectors, while hiring has slowed across the board in other industries, all pointing to signs the economy is less dynamic than earlier in the year.”
Ross said that in addition to the traditional unemployment rate ticking up for the second consecutive month, concerns are growing that labor underutilization rates are rising, as the unemployment rate for those marginally attached to the workforce and those working part time for economic reasons rose further.
“The labor market is buckling under the pressure of immigration and trade policy in conjunction with elevated interest rates, resulting in significantly weaker hiring demand,” said Sam Kuhn, an economist at Appcast. “Employment growth is at its weakest point in the post-pandemic recovery.”
Noah Yosif, chief economist at the American Staffing Association, explained that the slowdown in labor market activity has been driven by lower levels of job creation, rather than an uptick in layoffs. “Still, steady gains in unemployment suggest that labor demand can no longer accommodate the sheer number of people who are seeking work,” he said.
Accounting for the revisions in this report, employment growth in the last three months has averaged just 29,000. Payrolls have come in under 100,000 for four straight months, extending the weakest stretch of job growth since the pandemic.
“The U.S. labor market isn’t just slowing — it is now dangerously close to stalling,” said Laura Ullrich, director of economic research for North America at Indeed. “The [report] shows an economy straining under the immense economic uncertainty and significant policy changes of 2025. This anemic pace of job creation is not enough to keep unemployment from rising — a disturbing development in an environment where job openings, in addition to hiring, also remain weak.”
Daniel Zhao, Glassdoor chief economist, said that with the job market cooling so sharply, the question now is whether the May and June employment growth numbers represent the worst of the tariff impacts, as businesses responded to high uncertainty in the aftermath of the April 2 tariff announcements, and now there is room for the job market to stabilize going forward.
The latest BLS report likely seals the case for the Federal Reserve to cut interest rates by a quarter percentage point at its meeting in two weeks. “The question now is not whether the Federal Reserve will reduce interest rates, but by how much,” Yosif said. “Since monetary policy decisions often take several months to filter through the economy, the labor market may still have to endure further scarring as employers keep long-term hiring decisions on hold, posing serious risks to economic growth for the second half of 2025.”
Industry Breakdown
Health care again led industries in August, adding 31,000 jobs, below the average monthly gain of 42,000 over the prior 12 months. The leisure and hospitality (28,000 new jobs) and retail (10,000 new jobs) sectors also added to job growth.
Several industries, including information, financial activities, manufacturing, federal government, and business services, posted declines in August.
“Goods-producing sectors, as a whole, lost 25,000 jobs in August while service-providing sectors gained 63,000, buoyed by health care and leisure and hospitality,” Ullrich said.
“Most sectors are now shedding rather than adding jobs,” Kuhn said. “Even health care, the tentpole industry of recent job growth, slowed down. Manufacturing and professional and business services continue their downward trend, hampered by trade policy and elevated interest rates.”
Zhao said that while health care is traditionally resistant to recessions and demand for health care services is expected to continue to rise as the U.S. population ages, “there is an open question about whether health care will shift into a lower gear of jobs growth. If health care jobs growth slows, which could come as spending cuts start to eat into health care provider budgets, the job market risks logging more outright job losses.”
Ger Doyle, regional president, North America at ManpowerGroup, said that its real-time data shows a notable drop in new job postings for August, down 19% month-over-month.
“But zoom out, and the year-to-date picture is more stable, with only a 2% decline in open roles compared to 2024,” he said. “Employers aren’t pulling back from growth, they’re targeting it. In tech, the pivot is unmistakable.”
Doyle noted that legacy IT roles are being replaced by AI and data infrastructure hiring. Data scientist roles are up 296% year-over-year, and data architect postings have surged 792%, he said.
“Blue-collar roles are also showing resilience, with strong gains in construction laborer postings, up 37% year-to-date, and manufacturing, which saw a 7% increase in the second quarter compared to the first,” Doyle said. “Retail is recalibrating, with signs of strength in discount and home improvement segments offsetting pullbacks from traditional giants.”
Geno Cutolo, president of Adecco North America, said that hiring persists across many companies and industries. “And as we move into fall, we anticipate a ‘September Surge’ immediately followed by the peak holiday hiring season leading up to Black Friday,” he said.
Unemployment Edges Up
The unemployment rate for August was the highest since October 2021. “That’s still low by historic standards, but ignoring the pandemic period, the unemployment rate has not been this high since September 2017,” Ullrich said.
Unemployment inching upward mirrors the slowing job gains, Zhao said. “Unemployment had held in the 4 to 4.2% range for much of 2024 and 2025, but the increase in unemployment now starts to raise concerns that the job market is weakening more significantly,” he noted.
A broader measure of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons climbed to 8.1%, the highest level since October 2021.
The news is even worse for certain groups. “Black unemployment has been steadily rising, reaching 7.5%, its highest rate since October of 2021,” Kuhn said. “Younger workers are also facing a much tougher job market with unemployment rates rising to 10.5% — nearly a four-year high.”
Economists have largely characterized the labor market as a low-hiring, low-firing environment, but layoffs are slowly picking up. Job-cut announcements in August were the highest for that month since 2020 and the number of people unemployed for 27 weeks or longer climbed to levels not seen since the pandemic.
On a positive note, the labor force participation rate — the share of the population that is working or looking for work — rose to 62.3%. “After a three-month decline, the overall labor force ticked up to this year’s high — a positive development after the summer months’ significant cooling warned of a labor force waning under immigration policy pressure,” Kuhn said.
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