The U.S. labor market showed a stronger hiring pace in August after a sluggish summer, with payroll growth coming in well above recent expectations. The latest Labor Department report also showed a smaller share of Americans participating in the workforce than at the start of the year. Together, those figures point to a labor market that is still adding jobs but with a thinner pool of available workers.
Labor Department posts stronger August hiring total
The U.S. Bureau of Labor Statistics said Friday, Sept. 4, that total nonfarm payroll employment increased by 162,000 in August, while the unemployment rate held at 4.1%. According to the agency’s Employment Situation report, that was stronger than the average monthly gain of 31,000 over the prior 12 months and followed an upward revision to July, which was changed from a loss of 23,000 jobs to a gain of 21,000. June was also revised higher, leaving payrolls 55,000 above previously reported levels.
The August gains were concentrated in a few industries. Food services and drinking places added 59,000 jobs, local government education added 42,000, manufacturing added 16,000 and health care added 13,000, according to the BLS. The information sector moved the other way, losing 23,000 jobs during the month, with declines in data processing, publishing, and broadcasting.
Wages also continued to rise, though not rapidly. The BLS said average hourly earnings for private-sector workers increased by 10 cents in August to $37.75, up 3.1% from a year earlier, while the average workweek edged up to 34.4 hours. Reuters reported the stronger-than-expected payroll number renewed investor focus on whether the Federal Reserve could keep interest rates higher for longer or consider another increase later this month.
The Labor Department report is national in scope and does not break out a single state or metro area in its main release, so the immediate impact is broad rather than tied to one local market. What is confirmed is that the civilian labor force stood at 169.777 million in August, up from July but below 171.031 million in January. That amounts to a decline of roughly 1.25 million people so far this year, which aligns with the broader point that about 1.3 million people have left the workforce in 2026.
The labor force participation rate edged up to 61.6% in August from 61.4% in July, but it remained down 0.5 percentage point from January, according to the BLS. The number of people not in the labor force totaled 105.638 million in August, and 5.7 million of them said they currently wanted a job. The agency also said 1.7 million people were marginally attached to the labor force, meaning they wanted work and were available but had not searched in the prior four weeks.
What is not yet known from Friday’s national release is which states or metro areas accounted for the largest participation declines this year. The BLS publication does not provide a comprehensive local breakdown in the headline report, and more detailed state-level labor market releases are issued separately.
The mixed picture comes from two different surveys published in the same monthly report. Payroll growth is measured through the establishment survey of employers, while unemployment and labor force participation come from the household survey of individuals, the BLS said. That means solid job creation can coincide with weaker participation if fewer people are counted as working or actively seeking work.
Reuters reported after the release that the August data pointed to a stable labor market and put a September rate hike back into consideration. A separate Reuters analysis after the weak July report said falling labor force participation had been linked in part to tougher immigration rules and enforcement, which economists cited as one factor limiting labor supply. By August, Reuters said participation improved because fewer workers were leaving the labor market and more people moved from the sidelines directly into jobs.
For residents and workers, the practical takeaway is that hiring improved in August, but the labor market remains narrower than it was at the beginning of 2026. The next major update is scheduled for Friday, Oct. 2, when the Labor Department releases the September Employment Situation report. Until then, the August figures show an economy still creating jobs, with labor supply remaining one of the central pressures shaping the market.