U.S. Labor Market Bounces Back as August Payrolls Rise by 162,000

The U.S. labor market delivered a stronger-than-expected performance in August, giving Federal Reserve officials who favor higher interest rates additional evidence ahead of the central bank’s September policy meeting.

U.S. employers added 162,000 jobs last month, according to the government’s Nonfarm Payrolls report released Friday. The increase was nearly three times the 56,000 consensus estimate and marked a significant turnaround from July’s revised gain of 21,000 jobs. July’s initial reading had shown a loss of 23,000 positions.

The unemployment rate stayed at 4.1%, matching both economists’ expectations and the previous month’s level.

The report triggered an immediate reaction across financial markets. Bitcoin declined about 2%, falling below $80,000. The 10-year Treasury yield increased 3.3 basis points to 4.80%, while the two-year yield rose seven basis points to 4.40%. U.S. stock futures also traded modestly lower.

September Rate Decision in Focus

The employment data comes at a critical point for the Fed, which is preparing to decide on interest rates in less than two weeks.

Fed Chairman Kevin Warsh strengthened expectations for a possible September rate increase with a hawkish speech at Jackson Hole last week. Markets subsequently scaled back those expectations after Fed Governor Chris Waller, supported by New York Fed President John Williams, indicated that a hike was far from certain.

The latest jobs figures have now provided another boost to the Fed’s hawkish camp. Stronger hiring suggests that the labor market remains resilient, potentially giving policymakers more room to maintain restrictive monetary policy.

However, the decision is still likely to depend heavily on inflation data. Next Friday’s August consumer price index report will be closely watched for signs of whether price pressures are easing enough to influence the Fed’s September decision.