US Adds 162,000 Jobs in August as Unemployment Holds at 4.1%

The US economy added 162,000 jobs in August, a strong rebound after a weak summer, while the unemployment rate remained unchanged at 4.1%.

Hiring Rebounds After Weak July

Job growth has been volatile in recent months. The economy added 214,000 jobs in March, but only 21,000 in July before hiring recovered sharply in August.

Previous numbers were also revised higher. June employment growth was raised to 31,000 from 20,000, while July was revised from an initial loss of 23,000 jobs to a gain of 21,000.

Private-sector hiring looked weaker, however. ADP reported only 38,000 new private jobs in August, the lowest since January.

Economists describe the labor market as being in a “slow hire, slow fire” phase, where companies are not hiring aggressively but are also avoiding major layoffs.

Inflation Complicates the Fed Outlook

The stronger jobs report comes as inflation remains a concern.

US annual inflation climbed from 2.4% in February to 3.4% in July, while higher energy prices linked to the Iran conflict have added pressure.

At the same time, Treasury yields have risen, increasing borrowing costs for mortgages, car loans and other debt.

Markets are now watching the Federal Reserve closely. Economists expect at least one rate hike before the end of the year if inflation remains too high.

Fed Chair Kevin Warsh recently said the central bank still needs confidence that inflation is moving clearly toward its 2% target before changing course.

Investor takeaway: August’s jobs report shows that the US labor market is stronger than it looked a month ago. But the combination of higher inflation and resilient hiring could give the Fed more reason to keep interest rates high, which may remain a challenge for stocks and bonds.

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