US Unemployment Hits Four-Year High as Job Growth Stalls

Lead U.S. employers added just 22,000 jobs in August while the unemployment rate climbed to 4.3%, the highest since October 2021, highlighting a sharp slowdown in the labor market and bolstering calls for a Fed rate cut.

Nut Graf The Labor Department’s August employment report underscores a cooling economy as job creation decelerates sharply. With weak payroll gains and rising joblessness, economists now firmly anticipate the Federal Reserve to lower interest rates at its September meeting.

Key Findings

  • Nonfarm payrolls rose by a modest 22,000 in August, well below the 75,000 forecast.
  • The unemployment rate ticked up from 4.2% to 4.3%, marking its highest level in nearly four years.
  • Average hourly earnings increased 0.3%, matching July’s pace; annual wage growth slowed to 3.7% from 3.9%.

Sector Performance

  • Healthcare led gains with 31,000 new positions, though below its year-to-date monthly average.
  • Social assistance added 16,000 jobs, while manufacturing and federal government payrolls declined by 12,000 and 15,000, respectively.

Revisions and Dynamics

  • June payrolls were revised from a gain of 14,000 to a loss of 13,000-the first decline since December 2020.
  • July’s figures were adjusted up to 79,000 jobs from 73,000, but the overall trend remains subdued.
  • A surge of 436,000 new entrants to the labor force outpaced employment growth of 288,000, contributing to the higher jobless rate.

Market and Policy Reactions

  • Financial markets reacted by boosting bets on a quarter-point Fed rate cut at the September 16-17 meeting. Treasury yields fell and stocks edged higher on the prospects of cheaper borrowing costs.
  • Fed officials have signaled growing concern over labor market weakening, shifting the policy focus toward supporting growth rather than combating inflation.

Outlook With monthly hiring slumping and unemployment rising, the report cements expectations for imminent monetary easing. Analysts warn that unless job creation picks up, economic growth may falter in the coming quarter.