Jobless rate nears four-year peak with labor market experiencing slowdown

The U.S. economy experienced a significant slowdown in job growth in August, with only 22,000 jobs added, according to the Labor Department's employment report. This marks a stark contrast to the average monthly gain of 82,000 jobs seen during the same period in 2024.

The unemployment rate edged up from 4.2% in July to 4.3%, marking a nearly four-year high. The increase in joblessness was driven by losses in various sectors, including manufacturing, wholesale trade, information, financial activities, construction, and professional and business services.

Manufacturing shed jobs for the fourth straight month, contributing to the overall decline in job growth. The economy lost jobs in June for the first time in four and a half years, and job growth has slowed since April.

The average duration of joblessness also increased, with the average duration of unemployment jumping to 24.5 weeks, the longest since April 2022. Wages increased 0.3%, but a drop in hours worked raised concerns about economic growth prospects.

Economists attribute the revisions to the "birth-and-death" model used by the Labor Department. This model estimates the level of employment could be revised down by as much as 800,000.

The unemployment rate increase and job losses have been blamed on President Donald Trump's policies, including tariffs on imports, an immigration crackdown, and mass firings of public workers. Trump's import duties have boosted the nation's average tariff rate to the highest level since 1934.

In a separate development, the Federal government payrolls dropped by 15,000, and employment in that area is now down 97,000 since January.

On the other hand, the healthcare sector saw an increase in jobs, with payrolls in the sector rising by 31,000. However, this increase was below the average monthly gain of 42,000 over the last 12 months. Employment in the social assistance industry also rose by 16,000 positions.

Looking abroad, the current leader of the Deutsche Bundesbank, Joachim Nagel, has no plans to lower the interest rate in the coming days, as the EZB has recently paused at a rate of 2.0%. The next decision is scheduled for mid-September.