US unemployment holds at 4.1%, jobs far exceed estimates; Trump demands rate cuts

The US labour market bounced back in August, adding jobs at a much faster pace than expected and reversing some of the slowdown seen over the summer.

Nonfarm payrolls rose by a seasonally adjusted 162,000 in August, the Bureau of Labor Statistics reported on Friday, sharply ahead of the 53,000 increase economists surveyed by Dow Jones had expected. The unemployment rate held steady at 4.1%, in line with expectations.

“Net, net, the labour market is alive and well and generating thousands of new jobs to help keep economic growth squarely in the plus column,” said Chris Rupkey, chief economist at Fwdbonds, according to CNBC.

The report points to a relatively stable labour market, but its impact on the Federal Reserve’s next move will depend heavily on the inflation data due next week.

Markets initially moved towards a more hawkish rate outlook after the jobs report. Traders were pricing in around a 60% probability of a 25-basis-point rate hike at the Fed’s September 15–16 meeting, according to CME Group’s FedWatch tool.

Trump tells Fed to slash rates

US President Donald Trump has urged the Federal Reserve to cut interest rates, reacting to the stronger-than-expected August jobs report. “Lower the interest rates because the U.S.A. is a much stronger credit,” Trump said in a Truth Social post.

Trump also warned that he could cut off trade with countries with which the US runs trade deficits. “A STRONG COUNTRY MEANS A LOWER INTEREST RATE,” he said, while calling for the US to have the “LOWEST RATE of any country in the World”.

The labour market also showed strength in the household survey, with employment rising by 569,000 and the labour force expanding by 683,000. The broader unemployment measure, which includes discouraged workers and people working part-time for economic reasons, fell to 7.7% — its lowest level since June 2025.

Earlier employment figures were revised higher as well. July payrolls were revised to a gain of 21,000 from a previously reported decline of 23,000, while June was revised up by 11,000 to a gain of 31,000.

Job gains were relatively broad-based in August. Restaurants and bars added 59,000 jobs, government education increased by 42,000 and manufacturing added 16,000. Healthcare, which has been a major driver of employment growth, added 13,000 jobs, below its 12-month monthly average of 32,000.

There was also some evidence of pressure on employment in information-related industries, which shed 23,000 jobs.

Average hourly earnings rose 0.3% month-on-month, matching expectations, while annual wage growth came in at 3.1%, slightly above forecasts.

The report now puts the spotlight firmly on inflation. The Fed has kept rates unchanged since three cuts in late 2025, while inflation has remained above its 2% target for more than five years.

The next key data points will be the producer price index and consumer price index, due Thursday and Friday respectively, which could prove crucial in determining the Fed’s decision later this month.