Fewer jobs, more job seekers: US labour market under pressure in latest data

The US labor market showed further signs of strain in August, as job creation slowed and unemployment edged higher, adding weight to expectations that the Federal Reserve could soon lower interest rates. Economists had projected that the economy would add only around 75,000 jobs last month, while the jobless rate was seen ticking up to 4.3%. Although wages continued to grow at a steady pace—estimated at 0.3% month-on-month and 3.7% year-on-year—the gains were not enough to offset broader weakness.

Adding to concerns, prior months’ hiring was revised sharply lower. May and June payrolls were reduced by a combined 258,000, erasing some of the resilience earlier reflected in official data. Meanwhile, the private payrolls report from ADP showed just 54,000 new positions in August, and weekly jobless claims rose to 237,000, the highest level since June.

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Perhaps most striking, the Labor Department noted that the number of job seekers now exceeds available positions for the first time since the onset of the pandemic. This imbalance signals a cooling market where opportunities are becoming harder to secure even as more people enter the workforce.

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Financial markets have quickly adjusted their expectations. Traders now see a rate cut at the Fed’s September 16–18 meeting as virtually certain, with probability estimates above 95%. The central bank has been balancing the need to control inflation with maintaining employment, but weakening job data may push policymakers to act sooner. For now, the August report underscores a shift: after years of resilient employment growth, the U.S. job market appears to be moving into a slower, more fragile phase.

What White House says?

The White House signaled on Friday (September 5) that it expects the Federal Reserve to at least weigh the possibility of a larger interest rate cut when it meets later this month, following disappointing labor market data. Kevin Hassett, Director of the National Economic Council, told reporters that while markets largely anticipate a 25-basis-point reduction, policymakers could discuss a deeper cut. “The main expectation is for 25 basis points. I’d imagine a bigger cut will be considered, though I don’t expect it to be delivered,” he said.

Fresh government figures showed the U.S. economy added fewer jobs than expected in August, pushing the unemployment rate to 4.3%—its highest level in nearly four years. The Labor Department also revealed that jobs were lost in June, marking the first such decline in more than four years. Economists pointed to President Donald Trump’s steep import tariffs and tighter immigration policies, which have both constrained the labor pool, as key reasons for the slowdown.

Hiring has weakened significantly, with the number of unemployed Americans outpacing job openings in July for the first time since the COVID-19 pandemic. The President’s tariffs—raising the average U.S. duty rate to its highest since 1934—have fueled inflation concerns, prompting the Fed to pause its recent cycle of rate cuts. Trump has repeatedly urged the central bank to slash interest rates further, insisting such moves are necessary to support growth and his broader economic agenda. Critics, however, warn that such pressure risks undermining the Fed’s independence.

Still, August’s soft labor data has increased the likelihood of at least a quarter-point cut when Fed officials convene on September 16–17. Some analysts caution that seasonal factors may have exaggerated the weakness, as initial August numbers often appear lower before later revisions. Yet the broader trend shows clear cooling: average monthly job gains have slowed to just 29,000 over the past three months, compared with 82,000 during the same period in 2024.