TLDR
- The U.S. added 162,000 jobs in August, far above the 55,000 expected
- The unemployment rate held steady at 4.1%
- Food services added 59,000 jobs; the information sector lost 23,000
- Odds of a September Fed rate hike rose to around 60% after the report
- Treasury yields climbed and Wall Street futures fell on the news
The U.S. labor market surprised to the upside in August, with employers adding 162,000 jobs. That was nearly three times the 55,000 economists had expected.
BREAKING: The US economy adds +162,000 jobs in August, well above expectations of +55,000.
The unemployment rate was 4.1%, in-line with expectations of 4.1%.
July's job number was also revised up by +43,000 jobs and is now positive for the month.
The US job market nearly…
— The Kobeissi Letter (@KobeissiLetter) September 4, 2026
The unemployment rate stayed flat at 4.1%, according to the Bureau of Labor Statistics.
The biggest gains came from food services and drinking places, which added 59,000 jobs. That was well above the sector’s average monthly gain of 12,000 over the prior year.
Local government education added 42,000 jobs, largely reversing a dip seen in July. Manufacturing also continued a recent upward trend, gaining 16,000 jobs.
Not every sector did well. The information sector shed 23,000 positions, pointing to continued weakness in white-collar and tech-related employment.
Wages rose 3.1% from a year ago and 0.3% from the prior month. However, that wage growth is likely running below the current pace of inflation, which has been pushed higher by rising oil prices.
Fed Rate Decision Now in Focus
The Federal Reserve is meeting September 16-17, and the strong jobs data has shifted market expectations toward a rate hike.
According to the CME FedWatch tool, the probability of a 25-basis-point hike rose to around 60%, up from roughly 50% the day before.
The Fed has kept inflation as its main concern. The personal consumption expenditures price index has stayed above its 2% target for 65 straight months.
Fed Chair Kevin Warsh took a hawkish stance at last week’s Jackson Hole conference, signaling more needs to be done on inflation. But Governor Christopher Waller said Thursday he would lean toward holding rates steady if inflation data improves.
Three regional Fed presidents, from Cleveland, Minneapolis, and Dallas, have publicly called for a rate hike since the Fed held steady in July.
Markets React
Stocks and bonds both sold off after the report. The 2-year Treasury yield rose 5.5 basis points to 4.389%, while the 10-year yield climbed to 4.784%.
Wall Street futures moved lower as traders priced in a higher chance of tighter monetary policy.
Chris Zaccarelli of Northlight Asset Management summed it up: “Good news is bad news” for markets when a strong jobs number raises the risk of a rate hike.
The August inflation report, due September 11, is widely seen as the bigger factor for the Fed’s final decision. Most analysts say the CPI data will carry more weight than Friday’s jobs figures.
Revisions to prior months were also positive. June and July payrolls were revised up by a combined 55,000 jobs.
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