U.S. jobs surge to 162,000 in August, reviving inflation concerns ahead of Fed decision
Hiring far exceeded forecasts and labor force participation jumped, but wage growth remains weak and inflation still hovers above the Federal Reserve's target.
What happened
U.S. employers added 162,000 jobs in August, more than double the 65,000 forecasted by analysts. The unemployment rate held steady at 4.1%. The Labor Department also revised upward its June and July figures by 55,000 combined jobs. Major gains came in restaurants and bars (59,000), construction (22,000), and manufacturing (16,000). The labor force expanded by 683,000 workers in August after declining in the two prior months. However, average hourly wages rose only 3.1% year-over-year, the weakest increase since May 2021. The information industry, which includes telecommunications and data processing, lost 23,000 jobs and is down 97,000 since the start of 2026.
Context
The August hiring report may increase the likelihood that the Federal Reserve will raise its key interest rate at its September 15-16 meeting, as solid hiring suggests current borrowing costs may not be high enough to restrain the economy and cool inflation. Inflation, at 3.7% according to the Federal Reserve's preferred measure, remains above the central bank's 2% target. Inflation has dominated public concern this year, particularly as fuel prices hit record levels following U.S. and Israeli military action in late February, while meager wage growth has made rising prices more painful for households. Job creation remains below the 166,000 monthly average seen in 2023-2024, though it is substantially above the 9,700 average from last year. The information technology sector's decline reflects AI displacement of workers in customer service and software development roles.
What's disputed
Fed Governor Christopher Waller indicated he is leaning toward keeping rates unchanged but would support a hike if inflation data comes in high, showing division on the appropriate policy response.