The US labor market showed signs of a slowdown as private sector employment rose by just 54,000 in August, below expectations of 65,000. Data from ADP showed growth well below the upwardly revised July figure of 106,000. Economists said President Donald Trump’s sweeping import tariffs and immigration restrictions were hurting the construction and restaurant sectors.
In addition, layoffs by US employers jumped 39% to nearly 86,000 in August, the highest level since 2020, according to Challenger, Gray & Christmas. The government report also showed that for the first time since COVID-19, the number of unemployed people exceeded the number of job openings. The Fed’s Beige Book, on the other hand, said companies were cautious about hiring due to weak demand.
A Reuters poll of economists expected the government’s official jobs report on Friday to show an increase of about 75,000 nonfarm payrolls, roughly the same as the increase in July. However, job growth has averaged just 35,000 per month in the past three months, a sharp decline from 123,000 in the same period in 2024.
The unemployment rate is expected to rise to 4.3% from 4.2%. The development has fueled speculation that the Federal Reserve may cut interest rates at its mid-September policy meeting. While Chairman Jerome Powell has signaled that this is the case, he has also stressed that inflation remains a key risk to watch.
