US Payrolls Surge, Fed Rate Hike in Play

U.S. employers added 162,000 jobs in August, nearly triple economists’ forecasts, while the unemployment rate held steady at 4.1% and labor-force participation edged up to 61.6%. Revisions to June and July added a combined 55,000 jobs, indicating the labor market was stronger than previously reported despite concerns about slowing hiring and a “low-hire, low-fire” environment. Food services, restaurants and bars, and local-government education led hiring, while the information sector lost jobs. Annual wage growth cooled to 3.1%, its slowest pace since the pandemic, and inflation data due next week will be central to the Federal Reserve’s decision on whether to raise interest rates at its September meeting. Markets priced in a meaningful chance of a rate increase, with Treasury yields rising, stock futures weakening and the 30-year fixed mortgage rate reaching 6.71%. The report provided a political boost to the Trump administration ahead of the midterm elections, while an aging workforce, immigration restrictions, tariffs and elevated energy costs remained longer-term challenges.