Jobs Report: August Delivers Weakest Gains Since 2010 as Unemployment Rises to 4.3%

America’s job engine downshifts: weakest August hiring since 2010

August 2025 landed like a cold splash of water on a slowing economy. Employers added just 22,000 jobs—the lightest monthly gain since 2010 outside the pandemic years—while the unemployment rate ticked up to 4.3%, the highest since October 2021. This jobs report isn’t just soft; it suggests momentum may be slipping across much of the private sector.

The headline numbers weren’t the only problem. Revisions to earlier months made the trend look even worse. June—initially reported as a modest gain—was flipped to a loss of 13,000 jobs, the first monthly decline since late 2020. July was revised slightly upward, but not enough to change the broader pattern: hiring has cooled, and it’s been cooling for months.

Look under the hood, and the weakness is spread across key parts of the economy. Manufacturing shed 12,000 jobs in August. Professional and business services—often a bellwether for white-collar demand—lost 17,000. Those two categories touch factories, corporate offices, consultants, temp firms, and back-office contractors. When both are pulling back, it usually means companies are bracing for slower orders and trimming overhead.

One slice of the economy kept growing: health care and social assistance. That’s not new. Demographics and post-pandemic demand have given hospitals, clinics, and care providers a steady tailwind. But the gains there weren’t enough to offset declines elsewhere. As Nationwide’s chief economist Kathy Bostjancic put it, cyclical parts of private services outside health care have been running negative on average lately, and August kept that streak alive.

Context makes the August miss more jarring. Since January, the U.S. has posted the fewest jobs added in the first eight months of any year since 2010—even though the labor force is about 17 million people larger than it was during that earlier recovery. Indeed economist Julia Ullrich called it a disconnect: a bigger labor market, but a shrinking appetite to hire.

August can be a tricky month for seasonal adjustments—auto plants retool, schools prep for fall, and businesses reset budgets. But this slowdown isn’t a one-off seasonal quirk. Revisions tell a clear story: hiring was weaker in early summer than first thought, and the softness carried into late summer. That lines up with what many employers have been signaling: headcount freezes, longer approval cycles for new roles, and more scrutiny on costs.

What’s driving the shift? There’s no single culprit. Companies are juggling higher borrowing costs, uneven consumer demand, and a year of policy changes that have added uncertainty to planning. Some firms are pausing expansion until they see where rates, regulation, and global demand land. Others are absorbing productivity investments made over the last two years—software, automation, and AI—before greenlighting more hiring.

Hiring managers also say the bar has risen. Roles that were filled in weeks during the post-pandemic boom now sit open longer, not because of a flood of applicants, but because managers want near-perfect fits before committing. That dynamic shows up in headcount data: declines in temp hiring, slower growth in professional services, and fewer postings for midlevel corporate roles.

If you’re looking for a silver lining, it’s that the job market hasn’t broken—yet. A 4.3% unemployment rate is still low by historical standards. But the direction matters. Outside the pandemic, this was the sharpest rise in unemployment since 2017, and it came alongside broad industry softness. Taken together, it suggests the labor market isn’t just cooling—it’s at risk of stalling.

Another watch point: underemployment. When the unemployment rate rises, broader measures that capture part-time workers who want more hours and discouraged job seekers often creep up too. That can weigh on wages over time, especially in sectors exposed to discretionary spending. If wage growth slows while prices stay sticky, consumers could pull back more, creating a feedback loop that hits hiring again.

Sector by sector, the picture is mixed. Manufacturing’s decline hints at weaker orders and softer exports. Construction has held up better in recent quarters thanks to public infrastructure projects and factory building tied to industrial policy, but higher financing costs are a headwind for private development. Retail and hospitality have normalized from their post-pandemic recovery burst and now track more closely with household budgets—and those budgets are feeling the pinch from credit costs and fading excess savings.

Professional and business services are the tell. That bucket includes accountants, consultants, engineers, IT services, and staffing firms. When companies feel uncertain, they start there: postpone a project, stretch a contract, reduce temp usage. The August decline fits that playbook and is consistent with anecdotes from recruiters about slower requisition flow and more offer rescinds than a year ago.

What it means for workers, businesses, and the Fed

For job seekers, the market has become more selective. Openings are still there, but they’re clustered in health care, social services, and a handful of skilled trades. White-collar job searches are taking longer, and lateral moves in corporate roles now face more internal competition. Candidates with flexible skills—data literacy, operations know-how, AI tools—are getting more traction than those with narrow specializations.

For employers, the power balance has moved back toward the middle. Wage pressures are easing at the margins, especially outside health care and specialized tech. That said, retention still matters: replacing trained workers remains costly, and teams that have run lean for two years risk burnout if backfill hiring pauses drag on.

The policy implications are straightforward. With hiring this weak and unemployment rising, the Federal Reserve now has cover to start cutting rates in September. The debate is over the size: 0.25 percentage points or 0.50. Scott Helfstein of Global X expects the Fed to begin gently, signaling a cutting cycle that could continue into late 2025, but he notes the data give room for a larger opening move if the next reports don’t improve.

The Fed’s calculus is a balance of risks. Cut too slowly, and labor market slack could widen, dragging growth lower. Cut too fast, and if inflation proves sticky, they risk re-accelerating prices. The central bank has said it’s data-dependent; this report pushes the scale toward easing, especially given the downward revisions that made the early summer look weaker than believed at the time.

Rate-sensitive parts of the economy—housing, autos, small business borrowing—would feel any cuts first. Lower rates could stabilize construction employment and give some air to durable goods demand. But rate changes take months to fully flow through. If hiring doesn’t stabilize on its own in the fall, the Fed may need a sequence of cuts to keep the slowdown from hardening into a broader downturn.

Investors will parse the next few labor indicators for confirmation. Weekly jobless claims will show if layoffs are picking up. Job openings, quits, and hiring rates will reveal whether the bargaining power workers enjoyed during the tightest parts of the recovery is fading. And wage growth—especially for lower-wage service jobs—will signal whether consumer spending has more cushion heading into the holidays.

Here’s what to watch from here:

• Revisions to August and September payrolls: The direction of revisions often signals momentum that the first prints miss.
• Wage growth and hours worked: Slower pay gains or shorter workweeks can flag cooling demand before layoffs show up.
• Job openings and quit rates: Fewer openings and fewer voluntary quits point to softer worker confidence.
• Temp staffing and professional services: Early-cycle segments that typically turn before broader employment does.
• Manufacturing orders and export measures: A read on whether factory job losses are a blip or part of a longer downswing.
• Health care hiring: The most durable bright spot; if that cools, overall payrolls would weaken further.

The bottom line on August is simple: a bigger economy is creating fewer jobs than it should at this stage, and the loss of momentum is spreading to categories that usually lead turns in the cycle. If rate cuts arrive on schedule, they could help stabilize demand into year-end. If not, the risk is that a cautious summer for hiring becomes a cautious fall for investment—and a tougher winter for job seekers.