US Employment - August 2026

August’s labor market showed solid hiring and cooling wage growth, making the Fed’s job more challenging.

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Key takeaways from the Bureau of Labor Statistics (BLS) report, The Employment Situation – August 2026, include:

• August payrolls increased by a surprising 162,000 after rising by only 21,000 jobs in July. The BLS revised payroll figures for June and July, with June increasing by 11,000 workers to 31,000 and July increasing by 44,000 workers. 
• August’s unemployment rate remained at 4.1%.
• The participation rate increased from 61.4% to 61.6% as 683,000 people entered the workforce.
• A broader measure, U6, which includes marginally attached workers, decreased from to 7.9% to 7.7%.
• Average hourly wages increased by 0.3% in August and are 3.1% higher than a year ago, but wage growth remains below inflation.

The U.S. labor market continued to demonstrate surprising strength in August, powering through uncertainty related to the war in Iran, persistent inflation, and concerns about the broader economy. Hiring accelerated significantly, far exceeding the twelve-month average of 32,000 workers. Job gains were widespread, with leisure and hospitality, construction, manufacturing, health care, and local government education all adding employees.

The unemployment rate remained unchanged at 4.1%, a healthy rate considering that more than 600,000 people entered the workforce. The labor-force participation rate increased to 61.6%, marking a sharp reversal of the downward trend that had continued since November 2025. August’s increase was an encouraging development since restrictive immigration policies, reductions in the federal workforce, and an aging population have contributed to a contraction in the labor force. However, it is important to note that the civilian labor force is slightly smaller than a year ago, and participation is 0.5 percentage points below its January level.

A broader measure of unemployment improved. The U-6 unemployment rate, which includes unemployed people, those working part-time for economic reasons, and those marginally attached to the labor force, fell from 7.9% to 7.7%. The decline suggests that more people are finding work, even if some are not yet obtaining full-time employment.