The US labor market has begun to stall as employers face economic uncertainty due to tariffs imposed by US President Donald Trump and the immigrant crackdown that eased the labor pool.
The economy added 22,000 jobs in August, but unemployment rates rose to 4.3%, according to the latest indication that momentum will slow down in the labour market, according to a report issued by the U.S. Department of Labor on Friday.
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Healthcare has added 31,000 jobs and 16,000 social support, making it the only sector that will earn significant benefits.
Smaller increases were reported in construction, retail, professional services, business services, leisure and hospitality. These advances were offset by losses in other regions, including 15,000 federal jobs, 12,000 in manufacturing and 6,000 oil and gas extraction.
“Another poor employment report thanks to tariffs. With the benefit of revisions, it is becoming increasingly clear that tariffs are becoming heavier on employment and jobs. Manufacturing jobs are declining sharply, as are other trade-sensitive sectors such as mining and wholesale.
The July report was slightly revised, adding 79,000 jobs to 73,000. However, figures for June were significantly reduced from 14,000 jobs to 13,000 losses.
“After all the fixes went ahead, jobs fell in June. We don’t know anything except during a period near a natural disaster, a recession or a recession,” Amarnas said.
White House economic adviser Kevin Hassett told CNBC that the August figures were “unfortunate,” but said he hopes to bring revisions in the coming months.
“President Trump knows we are very optimistic about the future of work numbers,” Hassett later told the White House.
Wide reduction
The August report adds to this week’s set of weak indicators, pointing to the cooling labor market.
Wednesday’s opening of work and labor turnover survey showed vacancy levels have fallen to the lowest levels since the early months of the Covid-19 pandemic. For the first time since April 2021, there are more unemployed people than are available.
Private sector employment has also been slowed down. The ADP National Employment report, released Thursday, showed an increase of 54,000 in August, a sharp decline from 106,000 the previous month. The ADP investigation does not include government work.
“The year started with strong employment growth, but the momentum was lashed out by uncertainty,” said Nella Richardson, ADP chief economist, in a release.
Layoffs are also rising. Reports from Challenger, Gray & Christmas show that announced employers cut more than 85,000 positions, up 39% in August compared to July. That figure has increased by 13% from a year ago. So far, employers have cut their jobs by over 892,000, a total of more than 892,000, at their highest since 2020.
Political Fallout
The weak data comes just weeks after Trump rejected Bureau of Labor Statistics (BLS) committee member Erica Mantelfer after he significantly revised his May and June payroll figures.
“This employment report confirms what we already knew. The firing of President Trump’s BLS commissioner, Eric Mantelfer, was completely unfair and, by definition, was a case of shooting messengers.”
Trump replaced McEntarfer with the nomination of EJ Antoni, the chief economist of the far-right conservative think tank Heritage Foundation. Antoni has previously proposed to suspend monthly employment reports altogether.
Otherwise, there was widespread concern that Trump’s pressure on nonpartisan institutions could challenge the credibility of future data. “The question for everyone’s mind is whether or not this data can be trusted in light of political firing (Mcentarfer’s) political termination, and the president’s efforts to politicize the policies and data that were historically maintained separate from politics,” said Michele Evermore, a former Labor Bureau employee, in a statement shared with Al Jazeera.
Comments from the president and his allies on Friday did not quell those concerns.
“The real numbers I’m talking about will be whatever it is, but it’s going to be in the next year,” Trump told reporters Thursday. “You’re going to see that you’ve never seen a job figure like our country.”
“I think they’ll get better because they take away people who are trying to make noise towards the president (job number),” Commerce Secretary Howard Lutnick told CNBC.
It is delivered in focus
The most recent employment numbers will land two weeks before the next policy meeting of the US Federal Reserve. Central banks closely monitor employment data in setting interest rates, balance signs of weakness in the labour market and balance with sustained inflation.
The White House repeatedly cut interest rates on Federal Reserve Chairman Jerome Powell. As expected, if there are cuts at the September 16-17 meeting, it will be the first cut since December.
When the report was released, Trump regained pressure on the central bank.
“Jerome ‘too late’ Powell should have lowered the price a long time ago. As always, he’s “too late!”
The US market fell over by a disappointing report. The NASDAQ is down 0.3%, the S&P is down 0.6, and the Dow Jones industrial average is down. As of 2pm (18:00) in New York, the market is open below 0.7%.
