U.S. employers added 162,000 jobs in August, unemployment held at 4.1 percent and hundreds of thousands of Americans entered the labor force, producing the strongest monthly payroll increase in a year when hiring had slowed considerably. The federal employment report released Friday also revised June and July payrolls upward by a combined 55,000 jobs, placing August against a national economy still contending with inflation above the Federal Reserve’s target, elevated borrowing costs, shifting tariff policy and a federal deficit approaching $1.8 trillion through the first 10 months of the fiscal year.
The 162,000 payroll increase was more than five times the average monthly gain of approximately 31,000 recorded during the preceding 12 months. June employment was revised from 20,000 to 31,000 jobs, while July underwent a much larger correction, moving from a previously reported loss of 23,000 positions to a gain of 21,000. The revisions erased what had appeared to be a July payroll contraction and raised employment for the two months by 55,000 above earlier government estimates.
More workers also entered the employment market in August. The civilian labor force increased by approximately 683,000 to 169.8 million, while the separate household survey recorded an employment increase of about 569,000, bringing the number of employed Americans to approximately 162.7 million. Labor force participation rose two-tenths of a percentage point to 61.6 percent, and the employment-to-population ratio increased from 58.9 percent to 59.1 percent.
Beneath the national payroll total, August hiring was concentrated heavily in several industries. Restaurants and drinking establishments added 59,000 positions, nearly five times the sector’s average monthly increase during the previous year. Local government education added 42,000 jobs, although federal statisticians reported that the increase largely reversed the sector’s July decline. Together, those two categories supplied 101,000 of the 162,000 jobs added during the month.
Factories also expanded payrolls. Manufacturing added 16,000 jobs in August and has gained approximately 58,000 positions since employment in the sector reached a low in December 2025. Machinery manufacturers added about 6,000 workers, and fabricated metal manufacturers added another 6,000. Health care payrolls increased by 13,000, considerably below the industry’s previous 12-month average of approximately 32,000 jobs per month.
Construction employment increased by approximately 22,000, while the information sector eliminated 23,000 positions. Computing infrastructure, data processing and web-hosting businesses lost about 8,000 jobs, publishing employment declined by approximately 7,000, and broadcasting and content providers shed another 5,000. The losses placed technology and media-related employment among the clearest contractions inside an otherwise positive national payroll report.
The unemployment rolls contained approximately 7 million people in August. Among them, roughly 1.9 million had been without work for 27 weeks or longer, representing about 27 percent of all unemployed Americans. Another 5.7 million people outside the labor force reported that they wanted employment but were not counted as unemployed because they were not actively searching for work or were unavailable to begin a job.
Conditions improved for workers unable to obtain the number of hours they wanted. The number employed part time for economic reasons fell by 414,000 during August to approximately 4.4 million. That federal category includes employees whose hours have been reduced and workers seeking full-time positions but unable to find them.
Paychecks continued growing, although the increase occurred against consumer prices that remain elevated. Average hourly earnings for private-sector employees rose 10 cents during August to $37.75, bringing the 12-month wage increase to 3.1 percent. Production and nonsupervisory employees earned an average $32.53 per hour after an 11-cent monthly increase.
The latest inflation figures arriving alongside the employment report remain above the Federal Reserve’s 2 percent objective. Personal Consumption Expenditures inflation, the measurement favored by the central bank, was running at 3.7 percent annually in July. Core PCE inflation, which excludes food and energy, registered 3.3 percent. The figures have kept price stability at the center of Federal Reserve deliberations even as the labor market produced its strongest payroll performance in months.
Federal policymakers maintained the benchmark federal funds target between 3.50 percent and 3.75 percent at their July meeting. Those rates continue feeding through mortgage financing, automobile loans, credit cards, commercial borrowing and business investment while the central bank evaluates whether inflation is falling sufficiently to permit a change in monetary policy.
Federal Reserve reports gathered from businesses around the country recorded modest economic expansion across most districts, accompanied by substantially different conditions among industries. Manufacturing improved in several regions, supported in part by defense production and data-center development, while residential construction weakened. Automobile sales remained restrained as financing expenses stayed elevated, and businesses reported higher costs involving energy, transportation, metals, petrochemicals, insurance and health care.
Trade expenses have become increasingly visible within those business accounts. Manufacturers and retailers have reported higher costs associated with tariffs, while federal tariff policy has changed repeatedly during 2026 following court decisions and the administration’s use of alternative statutory authorities. The Congressional Budget Office estimates the effective U.S. tariff rate at approximately 10 percent, compared with roughly 2 percent in 2024.
The budget consequences are moving through federal projections as well. The Congressional Budget Office estimates that tariff-policy changes through July 31 will add approximately $900 billion to cumulative federal deficits between fiscal years 2027 and 2036 compared with its February baseline projection. About $200 billion of that amount is attributed to additional debt-service expenses.
Federal borrowing is already operating on a much larger scale. The government accumulated an estimated $1.8 trillion deficit during the first 10 months of fiscal year 2026, approximately $169 billion more than during the corresponding period a year earlier. Federal revenues increased about 3 percent during that period, while expenditures climbed approximately 5 percent. Adjusting for shifts in the timing of federal payments, the deficit was approximately $1.7 trillion.
The employment figures released Friday now enter a September economic calendar carrying stronger payroll growth than Washington had seen through much of the previous year. Employers added 162,000 workers, earlier payroll estimates were raised by 55,000, manufacturing continued climbing from its December employment low, labor force participation increased and involuntary part-time employment declined by more than 400,000.
Those gains are arriving while approximately 7 million Americans remain unemployed, 1.9 million have been looking for work for at least six months, inflation continues above the Federal Reserve’s objective and the federal government is financing a deficit measured in trillions of dollars. Interest rates remain restrictive across consumer and commercial lending, while tariff costs and changing trade rules continue appearing in corporate expenses and federal budget projections.
Federal Reserve officials will carry that combination of employment, inflation and financial data into their September policy meeting. August has supplied them with a labor market considerably stronger than the one portrayed by earlier monthly reports, while the government’s inflation, interest-rate, trade and fiscal accounts continue documenting economic pressures that employment growth alone has not eliminated.