US economy only adds 22,000 jobs in August
Newsflash: The US economy added much fewer jobs than expected last month, in a sign that the labor market may be cooling sharply.
August’s non-farm payroll rose by just 22,000 jobs, the Bureau of Labor Statistics has reported, much weaker than the 75,000 expected.
That’s a very weak jobs report, and the latest signal that the US economy is losing momentum.
The US unemployment rate has risen to 4.3%.
The BLS says:
A job gain in health care was partially offset by losses in federal government and in mining, quarrying, and oil and gas extraction.
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This chart from ING shows how the US jobs market has slowed in 2025:
A chart showing the US non-farm payroll Illustration: ING
They say:
Another soft jobs report is intensifying calls for meaningful Federal Reserve interest rate cuts. Consumers are already worried about squeezed spending power from tariffs and are now increasingly concerned about job security. Fed doves will intensify their calls for action
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The weakness in the US jobs market could encourage some policymakers at the Fed to consider a jumbo interest rate cut, rather than just quarter-point reduction to rates.
Janet Mui, head of market analysis at wealth manager RBC Brewin Dolphin, explains:
“The addition of just 22,000 jobs in August underscores a clear cooling trend in the U.S. labour market.
Manufacturing payrolls, which are particularly sensitive to tariffs, saw further declines and have now dropped by 42,000 since April this year.
This weak print is politically awkward for the administration, which has focused heavily on job creation via tariff-led industrial policy. With clear signs of slack emerging, today’s U.S. jobs report gives a potential green light for the Federal Reserve to cut rates in September. There is even chatter that a jumbo 50bps rate cut is on the table, depending on next week’s inflation data.
Investors are increasingly positioning for a shift toward looser monetary policy, with Fed funds rate expectations dipping below to 2.8% by the end of 2026.”
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US stock market hits record high after weak jobs report
The New York Stock Exchange Photograph: Julia Demaree Nikhinson/AP
Wall Street traders have driven stocks up to a record high at the start of trading in New York.
The S&P 500 share index, and the tech-focused Nasdaq share index have both touched intraday record highs as soon as the opening trading bell was rung.
That’s a surprising reaction to the weak August jobs report, until you remember that investors are now more convinved that the Federal Reserve will cut interest rates.
Neil Birrell, chief investment officer at Premier Miton Investors, explains:
“The US jobs market is probably the most watched economic data at the moment, having been noted by the Fed as a key indicator.
The August data shows a notably lower gain in payrolls than expected and the unemployment rate moved up to 4.3% with the average weekly hours worked falling.
There isn’t a huge amount to read into the numbers that is surprising, but it does suggest a weakening jobs market, which will probably nail down a Fed rate cut this month.”
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Updated at 09.37 EDT
Here’s another example of how the US jobs market has weakened:
The labor market is going from frozen to cracking.
Look at how many industries have LOST jobs in the past 3 months.
Mining -13,000
Construction -10,000
Manufacturing -31,000
Information -15,000
Business/Professional -51,000
Federal gov’t -34,000
Finance 0 job gains
The US job… pic.twitter.com/BsUYoCTMX3
— Heather Long (@byHeatherLong) September 5, 2025
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Capital Economics: US labor market has headed off a cliff-edge
August’s employment report confirmed that “the labour market has headed off a cliff-edge,” says Bradley Saunders, North America economist at consultancy Capital Economics.
Saunders told clients:
Non-farm payrolls rose by just 22,000 last month, while June’s 19,000 increase was revised to show a 27,000 fall – the first out-and-out decline in monthly employment since late 2020.
Along with a slight upward nudge to July’s figure, this leaves the three-month average employment gain at 29,000. The private sector added just 38,000 jobs last month, and even this modest figure owed a lot to a 47,000 rise in health care & social assistance employment.
Elsewhere, employment fell by 12,000 in both manufacturing and wholesale trade, as tariffs continued to bite. This takes the total toll on manufacturing employment since the start of the year to 78,000, confounding hopes of a tariff-led reshoring renaissance.
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Updated at 09.15 EDT
US manufacturing employment down by 78,000 in last year
One of the many pieces of bad news in today’s US jobs report is that manufacturing employment is down by 78,000 over the year.
That shows that Donald Trump’s promises of a factory resurgence have not yet been delivered.
I’m not a big believer in diving into the industry breakdowns because I believe that all jobs matter.
But the Administration has made dramatic policy shift to boost manufacturing, and it just ain’t working. Manufacturing employment fell -12k, and is down -78k over the year.
— Justin Wolfers (@JustinWolfers) September 5, 2025Share
Updated at 09.12 EDT
Bond yields fall after US jobs report misses forecasts
The weak US jobs report is sending investors racing to buy government bonds, driving up prices and lowering yields.
The yield, or interest rate, on US 30-year bonds has dropped by 6 basis points (0.06 percentage points), with shorter-dated Treasuries also rallying following the news that just 22,000 new jobs were created across the US last month.
UK government debt is benefitting too, just days after a painful sell-off.
Today, UK 30-year gilt yields have dropped by 5bps to 5.528%, the lowest since 18 August 18.
Benchmark 10-year UK bonds have also hit their strongest level since 18 August; they’re down 6bps at 4.668%.
That’s good news for chancellor Rachel Reeves – lower borrowing costs will mean the ‘black hole’ in her budget calculations will be smaller.
The downside, though, is that a weakening US economy is bad news for every other country too….
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“There’s barely been any job growth in the past 4 months,” points out Heather Long, chief economist at credit union Navy Federal.
Responding to today’s weak US jobs report, Long posts:
Almost all the jobs added are in healthcare. Without healthcare, job growth would be NEGATIVE in the past few months.
The Federal Reserve has to cut in September. And maybe October now.
The US economy lost -13,000 jobs in June –>The first negative month since December 2020 (!)
There’s barely been any job growth in the past 4 months.
Almost all the jobs added are in healthcare. Without… pic.twitter.com/p2hrN8wsh0
— Heather Long (@byHeatherLong) September 5, 2025
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September Fed rate cut looks nailed on
The sharp deterioration in hiring across America in the last few months makes it virtually certain that the US Federal Reserve will cut interest rates at its meeting later this month.
The odds of a September rate cut are 99%, according to CME’s Fedwatch tool (as they also were early this morning).
But as Richard Carter, head of fixed interest research at Quilter Cheviot explains, inflation could complicate the decision:
“Markets have been pricing in a 0.25% rate cut at the Federal Reserve’s upcoming monetary policy meeting, and today’s softer than expected jobs number may well grant that wish. Total nonfarm payroll employment shows August saw an increase of just 22,000, down markedly from a revised 79,000 in July and far below estimates. Meanwhile, the unemployment rate rose slightly to 4.3%.
“Last month’s payroll data showed large downward revisions to previous months, with May and June’s employment numbers dropping by a combined 258,000 from initial estimates. Today, we have seen a further downward revision to June’s total, taking it from an increase of 14,000 to a decrease of 13,000, and a modest 6,000 upward revision to July’s figure.
“Earlier this week, jobless benefit claims ticked higher, and today’s worse than expected payrolls figure cements the fact that the jobs market is weakening significantly. Following the Fed’s decision to hold rates in July, markets had already largely priced in a cut, regardless of today’s numbers. Still, one major obstacle remains. Inflation continues to complicate the Fed’s path, and next week’s CPI print will be critical, especially as several FOMC members remain cautious about easing policy under political pressure. With the full impact of Trump’s tariffs still unfolding, a hotter than expected inflation reading could lead to a split decision later this month.”
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Dollar slumps after weak jobs report
The US dollar is weakening on the foreign exchanges, after today’s shockingly bad jobs report.
The news that non-farm payrolls rose by just 22,000 in August, missing forecast of 75,000 new jobs, has pushed the dollar down against other major currencies.
The pound is now up three-quarters of a cent today, at $1.35, meaning it has now almost recovered its losses during Tuesday’s bond market wobble.
The Swiss franc has gained 0.6% too.
The dollar index, which measures the greenback against a basket of currencies, has dropped by 0.66%, as this chart shows:
The dollar index today Illustration: LSEGShare
Where jobs were created, or lost, in August
The BLS reports that the US healthcare section added 31,000 jobs in August, which is below the average monthly gain of 42,000 over the prior 12 months.
Employment in social assistance continued to trend up in August (+16,000), reflecting continued job growth in individual and family services.
But there was a 15,000 drop in employment in federal government. This area has now lost 97,000 jobs since its peak in January. That may not capture the full impact of the DOGE job cuts, as employees on paid leave or receiving ongoing severance pay are counted as employed.
There were also 6,000 job losses in mining, quarrying, and oil and gas extraction.
Wholesale trade employment fell by 12,000, as did manufacturing employment.
Employment in transportation equipment manufacturing declined by 15,000 in August, which the BLS says is partly due to strike activity.
It adds:
Employment showed little change over the month in other major industries, including construction, retail trade, transportation and warehousing, information, financial activities, professional and business services, leisure and hospitality, and other services.
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US economy lost jobs in June!
Ooof! Today’s non-farm payroll report also shows that America actually shed jobs in June.
The US Bureau of Labor Statistics reports that the change in total nonfarm payroll employment for June was revised down by 27,000, from +14,000 to -13,000.
July’s Payroll report has been revised up by 6,000, from +73,000 to +79,000.
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US economy only adds 22,000 jobs in August
Newsflash: The US economy added much fewer jobs than expected last month, in a sign that the labor market may be cooling sharply.
August’s non-farm payroll rose by just 22,000 jobs, the Bureau of Labor Statistics has reported, much weaker than the 75,000 expected.
That’s a very weak jobs report, and the latest signal that the US economy is losing momentum.
The US unemployment rate has risen to 4.3%.
The BLS says:
A job gain in health care was partially offset by losses in federal government and in mining, quarrying, and oil and gas extraction.
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Full story: Tesla offers Elon Musk a trillion-dollar pay package
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The US non-farm payroll is notoriously tricky to forecast.
It feels like the only guarantee is that the original number will probably be revised, higher or lower, in subsequent months.
Today, there are a range of forecasts – from just 25,000 new jobs to over 100,000 – which have been added up to give the consensus forecast of 75,000.
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US jobs report: a preamble
Tension is mounting in the financial markets as investors nervously await the latest US jobs report, due in half an hour.
August’s Non-Farm Payroll is forecast to show a 75,000 increase in employment last month, while the unemployment rate is expected to edge higher to 4.3%.
That would be a very small increase on July’s NFP report, which rose by 73,000 (along with substantial revisions to May and June’s data) – prompting Donald Trump to fire the head of the Bureau of Labor Statistics a month ago.
Another weak report today will put sizeable pressure on the US Federal Reserve to start cutting interest rates, while a strong NFP would complicate the picture.
Mohit Kumar of investment bank Jefferies explains:
We have been in the camp of a summer slowdown in employment, and we retain the view. The initial NFP release is a bit of a random number and this data would be taken with a grain of salt given the recent changes at the BLS.
In our view, market reaction would be bit of a barbell strategy. An inline or slightly weaker number would be good for risky assets. If the number is too low (less than 20k) it would raise concerns over the health of the economy. If it’s too high (above 150K), it would raise concerns over the ability of the Fed to cut rates.
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Updated at 08.11 EDT
Musk’s $1tn pay proposal – snap reaction
Tesla’s proposed $1tn pay deal for Elon Musk is “a massive package without precedent in corporate America”, says Bloomberg.
They add:
The plan dangles a financial windfall and expanded control of the company to Musk, already the world’s richest person, after his 2018 package valued in excess of $50 billion was struck down by a Delaware court.
While Tesla appeals that decision, the board is seeking other ways to compensate its CEO, including with an interim stock award in early August valued at about $30 billion.
The Financial Times predicts that “the sheer scale of the deal is likely to revive a fierce debate over the earnings of the world’s richest man”.
The FT points out that achieving the maximum payout of 423mn shares will be “extremely challenging”, adding:
Musk would have to boost Tesla’s market capitalisation to $8.5tn from $1.09tn today. That is more than twice that of Nvidia, currently the most valuable company in the world at $4.2tn.
The Wall Street Journal flags that the proposal would also give Musk increased voting power at the EV maker.
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Tesla proposes $1tn pay package for Elon Musk
Tesla’s board has proposed a new pay package for Elon Musk which would allow their chief executive to earn a staggering $1 trillion, if he hits a series of demanding targets.
The plan could see Musk awarded shares totalling 12% of Tesla’s total stock, if he engineers a surge in its value, grows its profits, and hits various operational goals.
Explaining the plan, Tesla’s board say it is vital to keep Musk at the company in the long term, suitably motivated.
They argue that Tesla can help bring about a society that “democratizes autonomous goods and services”, by creating and selling “innovative and affordable technologies at scale”
Tesla board members Robyn Denholm and Kathleen Wilson-Thompson say:
We believe that Elon’s singular vision is vital to navigating this critical inflection point. We also recognize the formidable nature of this undertaking and as a result, the importance of having a leader who is not only willing and capable but eager to meet this challenge.
Simply put, retaining and incentivizing Elon is fundamental to Tesla achieving these goals and becoming the most valuable company in history.
Under the plan, Musk would collect shares in instalment as Tesla’s value rises, from around $1tn today. To hit the maximum share payout, he needs to raise Tesla’s market capitalization to $8.5tn.
That, Tesla point out, is “approximately equal to the combined market capitalizations of each of Meta, Microsoft and Alphabet” today.
Installments of the pay packet will also pay out if Tesla delivers 20m vehicles, sells 10m active FSD subscriptions, sells a million AI robots, gets 1m Robotaxis into Commercial operation, or makes $400bn in adjusted EBITDA profits.
Urging shareholders to back the proposal, Denholm and Wilson-Thompson say:
“If Elon achieves all the performance milestones under this principle-based 2025 CEO Performance Award, his leadership will propel Tesla to become the most valuable company in history.”
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Updated at 07.07 EDT
The downgrade to UK retail sales this is a sign that consumers were more reluctant to spend – not a good sign for economic growth.
Rob Wood, chief UK economist for Pantheon Macroeconomics, explains:
“Official retail sales volumes growth now averages 0.2% month to month in the first half of 2025, compared to 0.3% previously.
“Weaker sales growth on average this year points to consumers reluctant to spend, which could challenge the growth outlook.”
Wood added there are signs that households have “rebuilt their rainy day savings and are cutting back on the amount of money they squirrel away each month, which should help support spending”.
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