US employers add 162,000 jobs in August as jobless rate holds at 4.1%

Payrolls beat forecasts

The United States economy added 162,000 nonfarm payroll jobs in August, exceeding the consensus forecast of 56,000 compiled by Reuters. Pre-report estimates from surveyed economists had spanned from a loss of 25,000 positions to a gain of 121,000. The Labor Department's Bureau of Labor Statistics reported that the national unemployment rate held steady at 4.1%. Job counts for June and July were revised upward by a combined 55,000, shifting July from an initially reported decline of 23,000 jobs to an increase of 21,000. These revisions brought the three-month average gain to just over 70,000 positions, with August hiring extending beyond healthcare into sectors that had previously struggled. The average workweek lengthened slightly to 34.4 hours, and the broader measure of underemployed and discouraged workers fell to its lowest point in over a year. T. Rowe Price chief U.S. economist Blerina Uruci described the employment outcome as an indicator of broader resilience.

It's a very good report; I can't emphasize that enough.

Market reaction and Treasury yields

Financial markets responded to the labor report with broad declines across equities and sharp increases in benchmark borrowing costs. The Dow Jones Industrial Average fell 271.86 points, or 0.51%, while the S&P 500 and Nasdaq composite also moved lower alongside commodity pressures such as record-high diesel prices. In government bond markets, the 2-year Treasury yield rose 7.6 basis points to 4.41%, while the 10-year Treasury yield climbed 3.2 basis points to 4.792%. The 30-year yield rose 1 basis point to 5.252%. Foreign exchange and commodity desks saw the dollar index rise 0.3% to 99.3, while spot gold fell 1.7% to $4,392 per ounce.

Fed policy and interest rate odds

The stronger payroll expansion altered market expectations for the Federal Reserve's rate-setting meeting scheduled for September 15–16. Market pricing indicated a 59% chance of a 25-basis-point interest rate increase following the report, rising from 52% on Thursday and 63.2% on Wednesday. Fed Governor Christopher Waller had commented at a Reuters NEXT Newsmaker event that he favored holding borrowing costs unchanged if incoming inflation data showed moderation. Annual growth in average hourly earnings dropped to 3.1% in August, marking the slowest expansion since the pandemic and falling below inflation. Josh Stevens, chief investment officer at Cresalta Investment Management, addressed the Federal Reserve's policy priorities following the report.

This is obviously a very volatile report, but it does mean that at this point the Fed's focus is going to be on inflation.

Political response and trade threats

The employment report drew immediate reaction from the White House, where Donald Trump tied the domestic hiring data to trade and central bank policy. The Federal Reserve has maintained benchmark borrowing rates since December while seeking to return inflation to its 2 percent target. Trump called on the central bank to slash borrowing costs to the lowest rate worldwide, arguing that the economy was strong enough to support lower rates. He warned that without rate cuts, he would halt trade with countries running trade surpluses against the United States. Federal data shows that the U.S. goods and services deficit widened in July to its largest gap in 16 months, driven partly by imports of artificial intelligence electronics from partners including Canada, Mexico, China, and European Union members.

LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT, which the U.S. Supreme Court, in its ridiculous and very costly Tariff decision, strongly acknowledged 'the President' has an absolute right to do