There’s surprising good news about the job market

August blindsided everyone, and not just by how fast summer ended: The US added 162,000 jobs last month, according to government data released yesterday. That’s more than triple the number that economists polled by Dow Jones predicted.

Plus, the unemployment rate remained at 4.1%, and the share of Americans who gave up on looking for work or worked part time due to a lack of full-time options dropped slightly.

Unlike in prior months, the job gains weren’t mostly in healthcare:

• Restaurants and bars added 59,000 workers. Construction and manufacturing payrolls grew by 22,000 and 16,000, respectively, while public schools gained 42,000 employees, rebounding from July’s decline.
• But the information sector—which includes tech jobs—shed 23,000 workers, which some analysts said could reflect AI automating white-collar work.

Overall: After job growth was revised upward by a total of 55,000 for the previous two months, the US added an average of 80,000 jobs monthly so far in 2026—an improvement from less than 10,000 per month last year, but below the pace of hiring in 2023 and 2024.

It’s not all rosy: Inflation outpaced the yearly wage growth, which slowed to 3.1%, down from 3.7% pay growth a year ago.

Stronger case to hike interest rates

Analysts say that now that the job market looks healthier, the Fed will focus on inflation data due next week as it mulls whether to hike interest rates at its next meeting on Sept. 16.

Wall Street thinks a rate hike has become more likely: The trading odds of a rate hike increased from 49% to 59% yesterday. The 2-year Treasury bond yield—which is closely correlated with the interest rates the Fed sets—also rose yesterday.

But President Trump issued a blistering threat…that if the Fed doesn’t react to the employment rebound by slashing interest rates, he’ll end trade with nations that have a trade deficit with the US—a long list that includes the EU and China.—SK