Job growth rebounded in August with solid gains
Department of Labor releases closely watched August 2026 jobs report
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The U.S. economy rebounded in August, adding jobs at a solid pace after a surprise decline in July amid economic uncertainty.
What are the key findings of the August 2026 jobs report?
The Bureau of Labor Statistics on Friday reported that employers added 162,000 jobs in August. That figure was well above the estimate of 56,000 made by economists polled by LSEG.
The unemployment rate held steady at 4.1% in August, which was also in line with the expectations of economists polled by LSEG.
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Revisions were made to the payroll numbers for the prior two months, with June revised up by 11,000 from a gain of 20,000 to 31,000; while July's report was revised up by 44,000 from a loss of 23,000 to a gain of 21,000.
Taken together, employment in June and July is 55,000 higher than previously reported.
What sectors added or lost the most jobs in August 2026?
Private payrolls added 127,000 jobs in August, well above the gain of 45,000 that was estimated by LSEG economists. July's growth in private payrolls was revised up from a gain of 30,000 to 71,000.
Government payrolls added 35,000 jobs in August, with the sector's loss of 53,000 jobs in July revised to a loss of 50,000 jobs. Local governments added 50,000 jobs, including 42,000 education roles, which more than offset declines in government employment at the federal (-5,000) and state (-10,000) levels.
The U.S. economy surprised to the upside, adding 162,000 jobs in August. (Yuki Iwamura/Bloomberg via Getty Images)
The manufacturing sector added 16,000 jobs in August, well above the LSEG poll's estimate of 5,000. The sector's gain of 5,000 jobs in July was also revised up to 14,000.
Food services and drinking places added 59,000 jobs in August, well above the average monthly gain of 12,000 over the past year.
Healthcare added 13,000 jobs in August, which represented a slowdown from the average monthly gain of 32,000 over the last 12 months. Within the sector, home healthcare services (+11,000) and hospitals (+8,000) added jobs.
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Information employment declined by 23,000 jobs in August, a deeper decline than the average loss of 8,000 jobs a month over the last year. Most of the losses occurred in computing infrastructure providers, data processing, web hosting and related services (-8,000), as well as in publishing (-7,000) and in broadcasting and content providers (-5,000).
Construction employment was little changed with a gain of 22,000 jobs in August, driven by nonresidential specialty trade contractors (+8,000), which was similar to the average monthly gain of 6,000 over the prior 12 months.
The construction sector added jobs at a modest pace in August. (Joshua Lott/Bloomberg via Getty Images)
What does the August 2026 jobs report mean for the workforce?
The number of long-term unemployed, defined as those who have been jobless for 27 weeks or more, was little changed at 1.9 million in August. The long-term unemployed accounted for 27% of all unemployed people last month.
The number of people employed part-time for economic reasons decreased by 414,000 to 4.4 million in August. These people would've preferred full-time employment but were working part-time because their hours had been reduced, or they were unable to find full-time jobs.
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The labor force participation rate ticked up to 61.6% in August, but is down by 0.5 percentage points since January. The employment-population ratio was 59.1% last month, having changed little this year.
Average hourly earnings increased by 3.1% year over year in August, above the estimate of economists polled by LSEG of 3%.
What experts are saying about the August 2026 jobs report
Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, said that "An upside surprise in payrolls will likely ramp up concerns about a rate hike, but that outcome is in the hands of next week's inflation numbers."
"If those come in cooler than expected, the Fed will likely feel comfortable discounting potential inflationary signals coming out of the labor market," she added.
Tim Urbanowicz, chief investment strategist for innovator ETFs at Goldman Sachs Asset Management, said "Today's report was strong, and we could see markets take a react first, ask questions later approach. But once the dust settles, we think investors will realize the broader trend of labor market rebalancing is still intact."
Adam Schickling, senior U.S. economist at Vanguard, said the labor market "is showing signs of near-term cyclical strength, even as longer-term structural concerns remain. Layoffs, job cuts and unemployment claims are still relatively low, but trends in long-term unemployment, hiring activity and underemployment among college graduates suggest that matching challenges persist beneath the surface."
"This report is unlikely to materially change the Federal Reserve's outlook on its own. The labor market remains resilient enough to keep the focus on inflation, and the path of inflation will likely carry more weight for policy than any single month of employment data," Schickling added.
Federal Reserve Chair Kevin Warsh (center) signaled in his Jackson Hole address last week that a resilient labor market should shift the Fed's focus to lowering elevated inflation. (David Paul Morris/Bloomberg via Getty Images)
What does it mean for interest rates?
The market interpreted the August jobs report as boosting the likelihood of the Federal Reserve hiking interest rates from the current target range of 3.5% to 3.75% when it holds its next meeting in mid-September.
The probability of a 25 basis point rate hike rose to 60.4% on Friday from 49.4% the prior day, according to the CME FedWatch tool.
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Political reaction
President Donald Trump said in a post on his Truth Social platform that the Fed should "Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago! A STRONG COUNTRY MEANS A LOWER INTEREST RATE – IT'S A BETTER CREDIT… Very simple! We should have the LOWEST RATE of any country in the World, like ‘the old days.’"
Trump added, "The Fed Board, with its great new leader, must get smart - BE PATRIOTS for a change. High interest rates put the U.S.A. at a very unfair disadvantage, and I won't allow that to happen!"
Bobby Scott, a Virginia Democrat and ranking member of the House Committee on Education Workforce, said in a statement: "The numbers are clear: President Trump's economy is not working for workers. Inflation has outpaced wage growth in recent months. And American workers are taking home a smaller slice of the economic pie than they have in the past 70 years," Scott added.
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What did the August 2026 jobs report mean for the market?
The benchmark S&P 500 Index was down slightly, falling 0.28% in mid-morning trading.
The Dow Jones Industrial Average was down 0.53%, while the Nasdaq Composite was down 0.16%.