The Summer of Blah continues in the US labor market. In fact, it even extended back further into June and July than previously reported, and previously revised.
The Bureau of Labor Statistics reported that the economy only added 22,000 jobs in August. With revisions, that means that the US only created 88,000 jobs the entire summer, and that will undoubtedly put pressure on Donald Trump to either adjust his approach or find job-creating investments stat:
Total nonfarm payroll employment changed little in August (+22,000) and has shown little change since April, the U.S. Bureau of Labor Statistics (BLS) reported today. The unemployment rate, at 4.3 percent, also changed little in August. A job gain in health care was partially offset by losses in federal government and in mining, quarrying, and oil and gas extraction. …
Among the unemployed, the number of new entrants decreased by 199,000 in August to 786,000, largely offsetting an increase in the prior month. New entrants are unemployed people who are looking for their first job. (See table A-11.)
The number of long-term unemployed (those jobless for 27 weeks or more) changed little at 1.9 million in August but has increased by 385,000 over the year. In August, the long-term unemployed accounted for 25.7 percent of all unemployed people. (See table A-12.)
In August, the labor force participation rate changed little at 62.3 percent, and the employment-population ratio was unchanged at 59.6 percent. Both measures have declined by 0.4 percentage point over the year. (See table A-1.)
At the same time, however, wages continued moving upward:
Average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents, or 0.3 percent, to $36.53 in August. Over the past 12 months, average hourly earnings have increased by 3.7 percent. In August, average hourly earnings of private-sector production and nonsupervisory employees rose by 12 cents, or 0.4 percent, to $31.46. (See tables B-3 and B-8.)
This seems very curious indeed. Why are wages still increasing above the current rate of inflation after three months (and arguably five months) of flat job-creation growth? This isn’t necessarily just a shift of departing immigrants and replacement by legal workers either. BLS calls the unemployment rate essentially flat, and that’s mainly correct, but that U-3 measure is ticking up slightly at 4.3%, when it was 4.1% in June. The more inclusive U-6 measure went from 7.9% in July to 8.1% in August, its highest reading in four years.
With that kind of trend, one would expect either wages or working hours to drop, but working hours are steady (overtime dropped a bit) and these wage numbers look pretty good. It’s a little mystifying. Replacement of illegal workers by legal workers might explain it, but if that were the case, we’d see drops in the civilian workforce numbers; instead, we added nearly a half-million workers in the Household data.
About the only bright spot in this report for Trump will be the pressure it puts on Jerome Powell and the Federal Reserve to act quickly on lending rates. The Wall Street Journal reports that Powell sees the current economy as “balanced,” but the need for more expansive investment is becoming obvious:
Federal Reserve officials are increasingly concerned about weakness in the labor market, with Fed Chair Jerome Powell citing it as a potential reason to cut interest rates this year. Fed officials are scheduled to meet later this month.
Powell has said the U.S. labor market has entered “a curious kind of balance,” where both the supply of and demand for workers is slowing. Immigration restrictions are crimping the availability of workers, and companies are bolstering their results by holding down hiring and getting employees to work more efficiently.
Consumers are starting to get pessimistic, the WSJ continues. Consumer sentiment dropped six percent in August, and that may be because they’re starting to see a jobs market that looks increasingly tilted toward employers:
It’s official: The US now has more unemployed people than job openings for the first time since April 2021.
In July, the US had:
7.18 million job openings
7.24 million unemployed peopleThis is yet another crack in the labor market that illustrates how much harder it is to get… pic.twitter.com/5ZJi6m5dgk
— Heather Long (@byHeatherLong) September 3, 2025
Another great chart that shows so many industries are shedding jobs now.
–>This is a white-collar and a blue-collar jobs recession.
Only healthcare, hospitality and retail are hiring. (And hospitality and retail are barely hiring)
(h/t to @MarcGoldwein for the chart) pic.twitter.com/BbPafY9qrM
— Heather Long (@byHeatherLong) September 5, 2025
Will Powell read these tea leaves and make a move on the prime rate? Stay tuned. You can bet Trump will be all over him to act now, and it seems pretty curious that the Fed has yet to react after the previous reports.
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