Berliner Boersenzeitung - US hiring weakens sharply in August as jobs market stalls

Overall, the figures confirmed a labor market slowdown in the world's biggest economy as businesses pull back on hiring while grappling with uncertainty sparked in large part by Trump's fast-changing tariffs.

US job growth came in at 22,000 last month, down from July's 79,000 figure, said the Department of Labor.

The jobless rate edged up from 4.2 percent to 4.3 percent, in line with analysts' expectations but reaching its highest level since 2021.

Job growth in June, while earlier estimated at 14,000, was revised to a 13,000 decline, the report said. Hiring in July was adjusted slightly upwards.

US employment numbers are a key data point that analysts monitor, as these usually have some bearing on how the Federal Reserve adjusts interest rates.

Friday's numbers are under particular scrutiny after a poor showing in July's data -- released last month -- prompted Trump to claim the figures were "rigged" and fire the commissioner of labor statistics.

US job growth missed expectations at the time, too, while revisions to hiring figures in the prior months brought them to the weakest levels since the Covid-19 pandemic.

In firing commissioner Erika McEntarfer last month, Trump charged that she had "faked" jobs data to boost Democrats' chances of victory in the recent presidential election.

He also pointed to the downward revisions to hiring numbers, saying that similar things have happened this year -- after his return to the presidency in January -- and "always to the negative."

But Nationwide chief economist Kathy Bostjancic said that data revisions take place as survey response rates have declined. If companies respond late, numbers have to be updated.

- 'Alarm bells' -

"The alarm bells are starting to go off in the labor market," said Heather Long, chief economist at the Navy Federal Credit Union. "More and more industries are shedding jobs."

She noted that almost all recently added jobs were in health care and that if that sector were excluded, job growth would be negative.

Health care added 31,000 jobs but federal government employment declined by 15,000 -- and is down by 97,000 since reaching a peak in January.

Manufacturing employment dropped by 12,000 in August and is down 78,000 over the year, while employment in the wholesale trade sector also fell.

Average hourly earnings rose 0.3 percent in August to $36.53, Friday's report showed, a similar rate to July.

"The 'no hiring' economy is turning to a layoff economy and if that worsens, it will lead to a recession," Long warned.

Trump's stop-start approach to rolling out tariffs has snarled supply chains and made it tough for businesses to plan their next moves. Many firms said they have been forced to put growth plans on hold.

A Briefing.com consensus forecast expected US hiring at 78,000 in August.

The cooldown in hiring has been notable, with KPMG senior economist Kenneth Kim earlier telling AFP that "last year, the average payroll gain per month was 168,000."

- Rate cuts likely -

"The fourth month of sub-par employment performance signals a dramatic stall in hiring and fully supports the Fed starting rate cuts at the next meeting," said Bostjancic.

Central bank officials are holding their next policy meeting from September 16-17, and Fed Chair Jerome Powell has previously opened the door to lowering rates.

"The real question now becomes how many rate cuts follow," Bostjancic said.

Since its last reduction in December, the Fed has held interest rates steady at a range between 4.25 percent and 4.50 percent as policymakers observed the impact of tariffs on inflation.

But a weakening jobs market could support the need for lower rates to boost the economy.

"This is not a picture of an economy at 'maximum employment,'" said Mortgage Bankers Association chief economist Mike Fratantoni.

But he added that the pace of any additional cuts will be "tempered by the ongoing risk of a pickup in tariff-induced inflation."

(L.Kaufmann--BBZ)