US Adds 162,000 Jobs in August, Blowing Past Forecasts; Private Data Shows AI Widening Employment Gap for Young Workers

The US economy added 162,000 jobs in August, the Bureau of Labor Statistics reported Friday, more than double the 65,000 economists had forecast and marking the strongest gain since March. The unemployment rate held at 4.1%.

July's tally was revised up to a 21,000 gain from an initial 23,000 loss, and June was revised up to 31,000 from 20,000. The data helped ease fears that the job market was slowing rapidly, with wage growth slowing to an annual 3.1%, a fresh five-year low.

"The market needs a result weak enough to give the Fed a reason to keep interest rates unchanged, but not so weak that it intensifies concerns about a recession," Linh Tran at XS.com told Zerohedge. "Stronger-than-expected employment and wage growth could push yields higher again and weigh on equities."

The two-year Treasury yield jumped after the data release, reflecting increased expectations the Federal Reserve will raise rates at its September meeting. The 10-year yield moved slightly higher. The Consumer Price Index next Friday is now in even sharper focus, according to Moody's Ratings chief credit officer Atsi Sheth, as reported by CNN.

The job gains were broad-based, with the diffusion index rising to 55.6, the highest since December 2024. The leisure and hospitality sector added 62,000 jobs, reversing heavy losses in June and July. Healthcare and social assistance added 28,400, and local government education added 41,900. Construction and manufacturing both added jobs for a second straight month, a likely reflection of AI-related infrastructure buildout, CNN reported.

However, the information and financial activities sectors — both highly exposed to AI adoption — contracted, shedding 23,000 and 11,000 jobs respectively. The labor force participation rate rose 0.2 percentage points to 61.6%, the first increase in eight months. Yet the percentage of unemployed workers job-hunting for 15 weeks or more rose to 43%, a five-year high.

**Private Data Signals AI Divergence for Young Workers**

A separate release from workforce intelligence firm Revelio Labs, published Thursday, painted a more modest picture. The firm's Revelio Public Labor Statistics estimate showed the US adding just 36,500 jobs in August, driven by Public Administration and Health Care, while Leisure and Hospitality and Retail Trade lost jobs. The figure was a correction from an earlier erroneous estimate of 218,600.

Revelio's AI Labor Market Tracker found that employment in the most AI-exposed occupations is down about 6% relative to the least-exposed occupations since November 2022. Among workers ages 22 to 25, that AI-exposure employment gap reaches 19%.

At the firm level, the most AI-exposed firms are recording fewer layoffs than the least-exposed firms, and firms adopting AI continue to expand headcount relative to non-adopters. "The data suggest that AI's labor market effects are concentrated in where employment grows and which workers face weaker opportunities, rather than in a broad wave of job losses," said Lisa Simon, Chief Economist at Revelio Labs, in the release.

Active job postings fell 3% month over month to 18.3 million, 2.2% below a year earlier, with the steepest declines in Transportation and Warehousing (down 13.2%) and Wholesale Trade (down 11.3%). Advertised salaries in new postings fell 3.4%, pointing to easing wage pressure.

**Market Reaction and Fed Calculus**

Coming into the report, futures were choppy with S&P 500 futures flat at 8:00 am ET. Option-implied moves for the S&P 500 around the jobs data were priced similarly to the prior month. JPMorgan's Market Intelligence desk described a "Goldilocks" scenario in the 30,000-to-70,000 range for a benign market reaction, according to Zerohedge.

"August's pick-up in payrolls looks like payback after two very weak months and the reversal of a seasonal adjustment distortion to education jobs, rather than a sustainable shift to a faster growth rate," economists at Pantheon Macroeconomics wrote, as cited by CNN.

The report lands when odds of a quarter-point Fed rate hike this month are roughly even. Fed Chair Kevin Warsh last week emphasized that policymakers' focus is firmly on inflation, and the employment report could help buy time to assess whether current policy is restrictive enough.

President Donald Trump, who has spent months promising an economic boom, expressed frustration with the positive jobs report, according to the Associated Press, which described the data as ultimately provoking frustration from the president.