US Job Growth Slows to 22,000 in August, Unemployment Hits Highest Since 2021

US job growth slowed significantly in August, with nonfarm payrolls increasing by only 22,000. The unemployment rate rose to 4.3%, its highest since 2021. The report will likely raise concerns about the labor market's durability, as job gains have moderated and wage gains have eased. The Federal Reserve is expected to cut interest rates at its September meeting, despite a strong consumer price index report.

US job growth significantly slowed in August, with nonfarm payrolls increasing by only 22,000, marking a notable deceleration from July’s upwardly revised 106,000. The unemployment rate rose to 4.3%, its highest since 2021 [3]. The report is likely to raise concerns about the labor market's durability, as job gains have moderated and wage gains have eased.

The ADP National Employment Report indicated that private firms added just 54,000 jobs in August, falling short of the expected 68,000. The main job gains came from services, while manufacturing continued to shrink. ADP’s chief economist pointed to stubborn labor shortages, cautious consumers, and the growing influence of artificial intelligence as reasons for the deceleration [1].

Government statistics also back up the trend, showing job openings have declined for two straight months. Additionally, Challenger Gray & Christmas reported nearly 86,000 layoffs in August—a 39% jump over July and the highest so far this year [1]. Despite low layoffs, the labor market remains sluggish, with employment gains averaging just 35,000 per month over the past three months, compared to 123,000 during the same period last year [2].

The Federal Reserve is expected to cut interest rates at its September meeting, despite a strong consumer price index report. The FOMC is coming off five consecutive holds on the federal funds rate in 2025 after ending 2024 with three straight cuts. The central bank waited for the economy to show sustainable softness before loosening its monetary policy in 2024 [4]. Many experts anticipate more cuts and gradually descending interest rates in 2025, but the Trump administration’s power consolidation, tariff turmoil, and upward wealth funneling create uncertainty and push additional cuts further down the line [4].

Markets are increasingly betting the Federal Reserve will lower rates this month in response to a softer job market. Weak hiring and rising layoffs have dialed up bets on upcoming rate cuts from the Fed. Investors are watching labor data closely, as easier policy would typically give stocks and bonds a boost. However, persistent pain in sectors like manufacturing could mean choppier waters for certain companies if the slowdown drags on [1].

The American workforce isn’t falling apart, but structural shifts—from AI automation to ongoing labor shortages—are remaking the landscape. The latest numbers suggest cooling but not collapse, and broad job losses haven’t materialized. That leaves the Fed walking a fine line: lowering rates to cushion the economy while keeping an eye on inflation and emerging risks [1].

References:
[1] https://finimize.com/content/us-job-growth-softens-as-layoffs-tick-up-in-august
[2] https://hrsea.economictimes.indiatimes.com/news/industry/us-jobless-claims-drop-despite-slow-hiring-unemployment-rate-at-risk/123579226
[3] https://www.tradingview.com/news/te_news:483231:0-us-unemployment-rate-rises-to-near-4-year-high/
[4] https://themortgagereports.com/122269/mortgage-rates-september-2025-fed-meeting-preview