Strong U.S. Jobs Report Sets the Stage for Possible Rate Hike – Commercial Observer
Payroll employment in the U.S. increased by 162,000 jobs in August, but that uptick did little to reduce the nationwide 4.1 percent unemployment rate.
In its monthly jobs report released Friday, the U.S. Bureau of Labor Statistics (BLS) said the biggest increases in hiring were in the food and beverage service industry and local government education. Meanwhile, wage growth slowed, with average hourly earnings increasing only 3.1 percent year-to-date in 2026.
The employment numbers beat analysts’ expectations of about 55,000 jobs added to the economy in August after July’s decline of 23,000 jobs, according to CME Group, and the unemployment rate was forecast to rise to 4.2 percent.
“The labor market ended the summer with more momentum than expected, easing concerns about labor-market weakness and tilting the Fed toward a rate hike if inflation remains hot,” Sam Williamson, a senior economist at First American Financial, said in a statement. “For the Federal Reserve, the strong report should ease any lingering concerns about a softening labor market. That puts a thumb on the scale toward a rate hike at the Fed’s meeting in two weeks, though next week’s inflation report will likely be the deciding factor.”
The food and beverage industry grew by 59,000 payroll positions in August, a huge increase from the average monthly gain of 12,000 jobs over the prior 12-month period, while the 42,000 education jobs gained in August was viewed by the BLS as an offset of job losses in the sector in July.
The “information” sector, which the BLS uses to describe tech industry jobs, lost 23,000 jobs in August, a major spike compared to the average 8,000 losses per month over the last 12 months.
By comparison, payroll services provider ADP released its own report Friday morning that showed its clients alone added 38,000 jobs, with those who remained at their current place of employment seeing only a 3 percent increase in pay versus the 4.7 percent raises seen by those who jumped ship.
Base pay in the U.S. decreased 3.2 percent in August after seeing a 3.3 percent dip in July, according to ADP’s data. ADP sees those wage figures as possibly a more telling indicator of the health of the labor market.
“Pay can tell us a lot about today’s choppy hiring,” Nela Richardson, chief economist at ADP, said in a statement. “To understand hiring patterns, you have to look deeply into where pay growth is accelerating, where it’s slowing, and for whom. Once-predictable wage growth has been overtaken by the complexities of demographic change, persistent inflation and AI’s effects on jobs.”
Mark Hallum can be reached at mhallum@commercialobserver.com.
