August's jobs report delivered a significant reversal after a turbulent summer. The Labor Department reported on Friday that U.S. employers added 162,000 jobs last month, far outpacing the roughly 55,000 gain economists had forecast and recovering from a loss of 23,000 jobs in July, which was itself revised upward by 44,000 to a net gain of 21,000.
The unemployment rate held steady at 4.1%, while the labour force participation rate climbed back from July's low to hit 61.6%.
The gains were driven largely by services and the public sector. Restaurants and bars added 59,000 jobs, and local government education gained 42,000 positions as teachers returned for the new school year. Construction contributed 22,000 roles, and manufacturing added 16,000. Healthcare continued to grow, though at a slower pace than earlier in the year, adding 13,000 jobs.
The standout contraction was in the information sector, which shed 23,000 positions , a sign of continued stress in white-collar, technology-adjacent employment.
Despite the headline strength, average hourly earnings rose just 3.1% year over year, still trailing the Federal Reserve's preferred inflation gauge, which stood at 3.7% in July. That gap means workers' pay is effectively losing ground in real terms.
The report arrives as the Fed prepares for its September 16–17 meeting, where rate-setters will decide whether to raise borrowing costs further. The strong job numbers reduce the case for a pause, with at least one analyst noting that a rate hike in September looks increasingly likely unless the upcoming inflation print surprises to the downside.
Planned job cuts across the U.S. fell to a four-year low in the first eight months of 2026, according to outplacement firm Challenger, Gray & Christmas, while hiring plans reached their highest level since 2023 suggesting the labour market's underlying conditions remain more stable than recent monthly swings have implied.
