After an unexpectedly bad jobs report in July, employers added a whopping 162,000 jobs in August, according to the Bureau of Labor Statistics. Economists had forecast about 50,000 new jobs.

Note: June’s job gain was revised from 20,000 to 31,000, and July’s change was revised from a loss of 23,000 to a gain of 21,000. Chart: Carson Elm-Picard / MS NOW; Source: Bureau of Labor Statistics

While this headline will get the most attention, revisions to previous months have indicated where the labor market is headed, and it is looking better this month. This summer there were 55,000 more jobs created than last reported.

In the spring there was hope that hiring was improving, but over the summer, the number of jobs created steadily declined. Today’s number, along with the revisions, will have many economists asking if this is a one-time event or the sign of a trend.

In July, there was a large drop in hiring by local governments for educational and teaching jobs, which makes sense as it was the middle of summer. In August, that loss was largely reversed.

One note of caution: Revisions to previous months have been quite extreme, and it is possible that a month from a now, heading into the midterm election, this surprisingly large increase could be revised downward.

The unemployment rate held steady at 4.1%. While that may sound good, it might be for the wrong reasons. To be considered unemployed, people have to be actively looking for work. But for almost a year, there has been a steep drop-off in the labor force participation rate, which suggests people are leaving the workforce entirely.

Economists are not sure why. It could be that more people are retiring, especially after recent record highs in the stock market boosted retirement savings. Or it could be that the administration’s anti-immigration and deportation policies are keeping people out of the workforce. Artificial intelligence has taken over some tasks that were filled by workers, and it might be for statistical reasons, as well.

“AI still appears to be weighing on employment,” wrote Samuel Tombs, chief U.S. economist, and Oliver Allen, senior U.S. economist, at Pantheon Macroeconomics. “AI likely is continuing to dissuade businesses in a wide range of sectors from adding to staff numbers for now.”

Jobs at risk of displacement by AI saw losses in August. Employment in the information sector and financial services shrunk by 23,000 and 11,000 respectively. The slowdown in hiring could be due to companies that overhired after the pandemic now reducing their workforce as well as laying off, or at least holding off, on hiring as they assess AI’s impact.

As for the type of work people are finding, many of the jobs are in lower-paying industries like home healthcare and restaurants. Surprisingly, 59,000 people were hired for work in bars and restaurants in August. Economists had expected a surge in hiring in June and July during the World Cup, but instead there were job cuts. Why this hiring happened at the end of the summer is not entirely clear.

Wages have not kept up. Compared with a year ago, average hourly earnings for private-sector employees rose by 3.1%, the slowest pace in more than five years. Since April, wage increases have stayed below inflation.

All this is for the Federal Reserve to consider when it meets in less than two weeks to decide whether to increase interest rates. In a closely watched speech last month, Fed Chair Kevin Warsh said that employment was “doing well” and that “labor markets are quite steady.” With today’s report, that trend continues and gives the Fed room to focus on inflation.

The Fed’s preferred rate of inflation last month was 3.7%, far above its 2.0% target. In recent months, the Fed has been divided about raising rates. Investors increasingly expect a rate hike to be announced at this meeting, but several Fed governors have suggested this week that recent increases in inflation could be temporary. Additionally, Warsh could face intense criticism from President Donald Trump ahead of the election. The president has repeatedly pushed for lower rates as recently as this week. Before the central bank meets, the latest inflation figures for August will be released.

Touting the report on social media, Trump kept up his call for the Federal Reserve to lower rates. “Great jobs number just announced,” he posted, adding, “Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!” High rates “put the U.S.A. at a very unfair disadvantage, and I won’t allow that to happen!”

Monday is also Labor Day. While the holiday originated in the labor movement and was backed by union leaders, union membership today continues to steadily decline. In 2025, the most recent year with available figures, 14.7 million people belong to a union, or 10% of the workforce. In 1983, the first year of comparable numbers, 20.1% of workers were union members.

Like so much these days, the decline in membership is seen through a partisan lens. More than 8 out of 10 Democrats see this decline as bad for the country, while nearly two-thirds of Republicans believe it has been good.

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