The US economy added 162,000 jobs in August, far exceeding economists’ expectations of roughly 55,000–65,000 new jobs. The unemployment rate remained steady at 4.1%, indicating that the labour market remains relatively strong.
The stronger-than-expected jobs report has increased expectations that the Federal Reserve (Fed) could raise interest rates at its September meeting. Market expectations for a 0.25 percentage-point rate hike rose after the report, although the Fed will also consider upcoming inflation data before making its decision.
Much of the August job growth came from restaurants and bars, local government education and other service sectors. Employment figures for June and July were also revised upward, suggesting that the labour market may have been stronger than previously estimated.
The report could make it more difficult for the Fed to cut interest rates soon, because a strong labour market alongside inflation above the Fed's 2% target gives policymakers more reason to keep monetary policy tight.