The United States economy added just 22,000 non-farm jobs in August 2025, according to the payroll report released on Friday, September 5, by the Department of Labor. The figure fell significantly below market expectations, which projected 76,000 new jobs, based on estimates collected by Broadcast. The unemployment rate rose to 4.3%, reflecting a slowing labor market, intensifying bets on interest rate cuts by the Federal Reserve. The data, marking the weakest job growth since the Covid-19 pandemic, included downward revisions for prior months, with June showing a loss of 13,000 jobs and July adding 79,000. This scenario raises concerns about the health of the US economy and its global implications.
The report, compiled by the Bureau of Labor Statistics (BLS), serves as a key indicator of the US labor market’s dynamics. August’s job creation was the lowest in months, signaling potential stagnation. Key highlights of the report include:
- Job creation: Only 22,000 new jobs, against 76,000 expected.
- Unemployment rate: Rose from 4.2% in July to 4.3% in August.
- Revisions: June data (-13,000 jobs) and July (79,000 jobs) revised downward.
- Wages: Average hourly earnings rose 0.3% monthly, reaching $36.53.
Sectors driving and hindering employment
The US labor market showed varied performance across sectors in August. Healthcare was a bright spot, adding 31,000 jobs, particularly in ambulatory services (13,000), residential care (9,000), and hospitals (9,000). Social assistance also contributed, creating 16,000 jobs, driven by individual and family services. Conversely, the federal government sector saw significant losses, shedding 15,000 jobs, accumulating a decline of 97,000 since January. The mining and oil/gas industries lost 6,000 positions, while wholesale trade and manufacturing, especially transportation equipment, faced strikes and lost 12,000 jobs each. These figures highlight a labor market with contrasting dynamics, where service sectors maintain some resilience, but industrial areas face pressures.
The slowdown in hiring raises questions about underlying factors. Immigration restrictions and trade uncertainties, including government policies, have been cited as potential influences. Additionally, the quality of employment surveys is under scrutiny, with lower company response rates and data collection challenges potentially affecting the accuracy of future revisions.
Financial market reactions
The weak payroll figures bolstered expectations for a cycle of interest rate cuts by the Federal Reserve, with the next Federal Open Market Committee (FOMC) meeting scheduled for September 16-17. Analysts anticipate a 0.25 percentage point rate cut, with the current rate between 4.25% and 4.5%. US inflation, at 2.7% annually in July, remains above the 2% target, but the payroll data suggests a cooling labor market may allow for more monetary easing. The drop in 10-year Treasury yields below 4.20% reflects market relief, with investors adjusting positions ahead of Fed actions.
- Expected market impacts:
- Increased bets on a September rate cut.
- Decline in Treasury yields, easing fiscal pressures.
- Potential strengthening of the Brazilian real against the dollar.
- Caution with risk assets amid recession fears.
Global markets reacted cautiously, with Asian and European exchanges slightly up but attentive to the Fed’s next moves. In Brazil, the payroll data could influence exchange rate dynamics, with the real potentially appreciating against the dollar, supporting local monetary policy and possible Selic rate cuts starting in December.
Wages and work hours
Wage growth was modest in August. Average hourly earnings rose 0.3% month-over-month, reaching $36.53, a 3.7% increase from August 2024. The average workweek remained steady at 34.2 hours, with manufacturing recording 40 hours and 2.9 hours of overtime. These figures suggest that, despite the slowdown in job creation, employed workers maintain relative income stability. However, the stagnant workweek reinforces perceptions of a less dynamic market, with companies hesitant to expand hiring or increase hours.
The ADP report, which tracks private-sector job creation, corroborated the slowdown, reporting 54,000 jobs added in August, down from 106,000 the previous month and below the 65,000 forecast. This reinforces the view that the private sector is also struggling to maintain hiring momentum.
Unemployment and labor force participation
The unemployment rate of 4.3% in August, the highest since 2021, reflects a less robust labor market. The number of unemployed reached 7.4 million, with 1.9 million classified as long-term unemployed (over 27 weeks), accounting for 25.7% of the total. Discouraged workers, who stopped looking for jobs, totaled 514,000, unchanged from July. The labor force participation rate, measuring the proportion of people employed or seeking work, was 62.3%, while the employment-population ratio, indicating the share of employed people in the total population, stood at 59.6%. These metrics suggest stagnation in new workers entering the market, with a drop of 199,000 new entrants, totaling 786,000.
- Key labor market indicators:
- Unemployment rate: 4.3%, highest since 2021.
- Long-term unemployed: 1.9 million, 25.7% of the total.
- Discouraged workers: 514,000, stable from July.
- Participation rate: 62.3%, unchanged.
Global economic implications
August’s payroll data reinforces perceptions of a slowing US economy, with global repercussions. The weak labor market may pressure the Federal Reserve to accelerate rate cuts, impacting currencies and emerging markets like Brazil. The creation of just 22,000 jobs, coupled with downward revisions for prior months, suggests the US economy may be more fragile than anticipated. However, sectors like healthcare and social assistance continue to support parts of the market, indicating uneven deceleration.
The Fed’s next meeting will be critical in setting the pace for monetary policy adjustments. A less robust labor market may be seen as positive for inflation control but also raises recession concerns if the trend persists. In Brazil, the scenario favors real appreciation and creates room for the Central Bank to consider Selic cuts, especially if global inflation remains contained.
Comparison with previous months
The addition of 22,000 jobs in August marks the fourth consecutive month with results below 100,000, the weakest pace since the pandemic. July’s revised payroll showed 79,000 jobs added, while June recorded a loss of 13,000. These figures contrast with earlier robust periods, such as early 2024, when revisions indicated the US economy created 818,000 fewer jobs than reported between April 2023 and March 2024. The trend of downward revisions raises concerns about the reliability of initial data and underscores the need for caution in interpreting payroll numbers.
- Monthly comparison:
- August 2025: 22,000 jobs created.
- July 2025: 79,000 jobs (revised).
- June 2025: -13,000 jobs (revised).
- August expectation: 76,000 jobs.
The August report highlights the fragility of the US labor market, with implications extending beyond US borders. The combination of low job creation, rising unemployment, and negative revisions reinforces the view that the US economy faces growing challenges, while investors and analysts await the Federal Reserve’s next steps.