WASHINGTON— Sluggish August hiring boosted expectations Friday that the Federal Reserve will cut rates at its September meeting.
The U.S. job market faltered last month, adding only 22,000 positions as businesses grappled with tariff-related disruptions. The slowdown was compounded by a downward revision showing a loss of 13,000 jobs in June—the first monthly decline since December 2020. The unemployment rate rose to 4.3%.
“August's sluggish hiring numbers, combined with downward revisions to prior months, showed the economy added only about 30,000 jobs per month during the summer, with gains concentrated in just a few sectors,” said America's Credit Unions Senior Economist Dawit Kebede. “Low hiring and rising unemployment imply a decline in consumer spending and economic growth, which generally leads to reduced price pressures. ‘
With employment showing continued weakness and rates still in restrictive territory, the Federal Reserve is positioned to cut rates this month and likely deliver additional cuts before year-end to move policy toward neutral levels, Kebede said.
“With economic concerns, credit unions will be there to support members facing financial challenges and continue supporting their communities through affordable lending and strong financial management,” he added.
Mike Fratantoni, SVP and chief economist at the Mortgage Bankers Association, acknowledged the job market is softening.
“With even sectors like healthcare, which had steadily contributed to job growth, now slowing,” he said. “Job losses continued in the federal government and manufacturing sectors. Wage growth at 3.7% over the past year is steady, but it is certainly running at a slower pace than a year ago.
“While the headline unemployment rate increased to 4.3%, what was more notable was the larger increase in the U-6 to 8.1%, with more workers only able to find part-time work or becoming discouraged by the lack of job openings, and the continued increase in the length of unemployment spells,” continued Fratantoni. “While the pace of layoffs has picked up somewhat, the hiring rate remains quite low. It is increasingly difficult for those laid off, and for new entrants into the job market, to find a position.”