The August jobs report is set to be released on Friday morning, with forecasts indicating that employers added 65,000 jobs in the previous month, while the unemployment rate is anticipated to have risen slightly to 4.2%. US employment is poised for a rebound following the unexpected decline in July, during which the economy saw an estimated loss of 23,000 jobs, while the unemployment rate fell to 4.1% as individuals left the labour force. Analysing the recent monthly fluctuations, which have been quite significant, the fundamental narrative is anticipated to persist: the labour market continues to exhibit characteristics of “low-hire, low-fire.” The stasis and the tepid job growth may not show it, but this labour market is undergoing a significant transformation as Baby Boomers retire, net immigration slows, AI advances, and exogenous shocks ripple through the economy. Alongside the latest projections, the agency released a database that categorised occupations based on their theoretical and observed exposure to AI. The exposure categories are not intended to serve as an accurate prediction of employment growth or decline; rather, they aim to offer insights that may assist in making informed career decisions.
Last year’s job growth ranked among the weakest on record, and newly available data indicates that employment growth was likely even more sluggish than previously estimated. The US economy added 79,000 fewer jobs than initially estimated between April 2025 and March 2026, as reported last week by the BLS in a preliminary release of its annual benchmarking. This process involves reconciling data from monthly surveys with quarterly unemployment insurance tax filings to achieve a near-complete employment count. If these estimates hold (the final revision will be released early next year), job growth during that period will be adjusted downward to 194,000 from 273,000, translating to approximately 16,000 jobs per month compared to nearly 23,000 jobs per month. Thus far in the current year, the average monthly job growth stands at just below 61,000 positions.
That figure represents approximately fifty percent of the average observed in 2024 or during the preceding eight decades prior to the pandemic. Hiring has been constrained due to elevated uncertainty, increased interest rates, persistent inflation, and fluctuating policy changes alongside geopolitical events. “These drivers that are underlying employers’ hesitance to hire – both inflation as well as uncertainty – they are going to take a long time to ease,” Noah Yosif told. “What employers are really looking for is their cost of business to come down and then to have more certainty.” However, the economy no longer requires the same level of job creation as it previously did. “We’re continuing to see lower labor supply due to things like lower immigration, lower birth rates, increased retirement – and so that’s going to keep the labor market broadly in balance,” he said. July’s estimated job losses were unexpected, yet they should not provoke undue concern, several economists remarked in their analyses this week. The decline was “almost certainly a quirk of seasonal adjustments,” wrote Dean Baker, senior economist at the Center for Economic and Policy Research. He observed an estimated 49,600 decline in local government education positions, which likely stemmed from school districts modifying the timing of summer breaks.
Employment is anticipated to recover in local educational institutions and the leisure and hospitality sectors; nonetheless, these advancements may be counterbalanced by declines associated with the Trump administration’s cessation of Temporary Protected Status for Haitian workers, according to EY-Parthenon economists Gregory Daco and Lydia Boussour. “Beneath the volatility, job growth remains soft but stable,” they noted. The labour market appears to be robust, with low unemployment rates, job cut announcements down by 40% compared to the same period last year, and wage growth not viewed as a contributor to inflation. However, it’s a labour market that is performing adequately for the economy, yet many workers and job seekers do not perceive it positively, Yosif stated. “For the better part of three years, 94% of jobs have been created within just three sectors: healthcare, leisure and hospitality, and (state and local) government,” Yosif said. “So, while folks like (Federal Reserve Chairman) Kevin Warsh say that the labor market is broadly in balance, that really doesn’t connect with the options available to many job seekers today.” The BLS’ latest labour turnover data, released Tuesday, indicated that hiring activity remained subdued despite an increase in job postings, suggesting that employers continue to exercise caution.
Additionally, data released on Thursday indicates that the “low-fire” descriptor remains stable. In the previous month, a greater number of US businesses disclosed plans for job reductions compared to July. However, at 52,881, this represents the lowest total for August since 2022, according to new data released by Challenger, Grey & Christmas. Jobless claims persist at low levels, with the latest data from the Labour Department indicating a figure of 206,000 for the previous week. Healthcare is anticipated to remain a significant contributor to the job gains observed in August. That was indeed the case in ADP’s latest monthly private-sector employment report released on Wednesday. The payroll giant reported that education and health services contributed 45,000 jobs last month, compensating for losses in other sectors, resulting in a net increase of 38,000 jobs. On Wednesday, ADP introduced an interactive pay database and commenced the reporting of base pay data, which does not include bonuses, commissions, tips, or other forms of earnings. Overall base pay decelerated to 3.2%, remaining stable at 3% for job-stayers while moderating to 4.7% for job-changers. “There is a cost to a low-hire, low-fire labor market, because one of the ways that workers outrun too-high inflation is by switching jobs,” said Nela Richardson. “If the premium for the opportunity to job-switch isn’t present, it’s going to be harder for workers overall to keep up with higher inflation.”
