The Agricultural University surpassed expectations in August! US labor market “accelerates again” as interest rate hike expectations rise

The Zhitong Finance App learned that data released by the US Bureau of Labor Statistics on Friday showed that the number of people employed in non-farm payrolls increased by 162,000 in August, which is significantly higher than the average monthly increase of only 31,000 people in the previous 12 months. This figure not only far exceeded market expectations of 55,000 people, but also showed an astonishing reversal from the value at the beginning of July (a decrease of 23,000 people). The unemployment rate remained unchanged at 4.1%, and the number of unemployed stabilized at 7 million. US employment growth rebounded beyond expectations in August, and the unemployment rate remained flat, indicating that labor market momentum was stronger than previously anticipated.

Meanwhile, the non-agricultural data for June and July were revised — the number of new jobs added in June was raised from 20,000 to 31,000, and in July it was drastically revised from a reduction of 23,000 to an increase of 21,000. In total, the two months increased 55,000 jobs compared to previously published data. This means that the employment contraction shown in the July report has been completely corrected, and the US job market has “re-accelerated” after several months of significant deceleration.

After the data was released, the market reacted quickly — the CME “Federal Reserve Watch” showed that the probability that the Fed would keep interest rates unchanged in September fell to 49.4%, and the probability of a cumulative 25 basis point rate hike rose to 50.6%. US Treasury yields rose, stock index futures declined, and gold fell below $4,400. Earlier, Federal Reserve Governor Waller stated on Thursday that if inflation continues to cool down, he would prefer to keep interest rates unchanged in September. However, the strong performance of non-farmers tilted the balance of interest rate hikes again.

Industry differentiation: Catering and education lead the way, medical care cools down, and information continues to shrink

Judging from the industry structure, although the total employment growth in August was impressive, the distribution was uneven.

The restaurant and bar industry added 59,000 jobs in the same month, far higher than the average monthly increase of 12,000 people over the past 12 months, and is the biggest single source of non-agricultural growth in August. Local government education departments added 42,000 jobs, which largely offset the July decline.

Employment in the manufacturing industry continued to improve, with an increase of 16,000 in August, and a cumulative increase of 58,000 since the low in December 2025, of which the machinery manufacturing industry and the metal products manufacturing industry each increased 6,000. The construction industry added 22,000 people, and non-residential specialty contractors continued to grow moderately.

However, the healthcare sector, which previously supported the US job market for a long time, has cooled down markedly — it only increased by 13,000 people in August, far below the average monthly increase of 32,000 people over the past 12 months. The information industry continues to be a major drag, losing 23,000 jobs in August, compared to an average of about 8,000 people per month in the previous 12 months. Among them, computing infrastructure, data processing, web hosting and related services were reduced by 8,000 people, and the publishing industry decreased by 7,000 people. There are signs that artificial intelligence is having a structural impact on the job market.

From a broader perspective, the labor force participation rate rose slightly to 61.6% in August, the first improvement in nearly a year. The average hourly wage rose 0.3% month-on-month and 3.1% year-on-year. The wage growth rate remained low, which meant that the renewed increase in the number of employed people was not accompanied by a significant acceleration in wage inflation. The number of people working part-time for economic reasons fell by 414,000 to 4.4 million.

Mortgage interest rates hit a new high of more than a year, adding another chill to the real estate market

On the eve of the release of non-farm payrolls data, US mortgage interest rates first climbed to a high level of more than a year. According to data released by Freddie Mac on Thursday, the average interest rate for 30-year fixed mortgages in the US rose to 6.71% this week, up from 6.66% last week, the highest level since July 2025. Since this year, the interest rate fell to a three-year low of 5.98% on February 26. Since then, the overall trend has been rising for several months due to the war in Iran.

The yield on US 10-year Treasury bonds has risen to 4.74%, far higher than the value of 3.97% before the war in Iran started. The rise in mortgage interest rates will reduce the purchasing power of potential buyers, making more potential buyers choose to wait and see. Economists said that mortgage interest rates are not expected to fall substantially this fall. High inflation will not only erode the growth of wages and actual income, but will also cause mortgage interest rates to remain high for a longer period of time.

Suspense over the Fed's interest rate hike in September: the non-agricultural sector has already been “handed over”, the future depends on CPI

The strong performance of the non-agricultural sector in August raised the probability that the Federal Reserve would raise interest rates in September to about 50%. However, several analysts pointed out that the current non-agricultural report itself may not be enough to finally decide whether to raise interest rates in September — unless the data is significantly weaker than expected. Federal Reserve Governor Waller may hand over the final decision to the CPI data released on September 11.

Currently, the US is facing a complex policy environment: the labor market has shown resilience beyond expectations, but the inflation rate is still far above the Fed's 2% target; mortgage interest rates have climbed to a high level for more than a year, and the real estate market continues to be under pressure; and the energy price shock and supply chain tension caused by the Iran war continue. Federal Reserve Chairman Walsh recently made it clear that the main focus at this stage should be prices.

This means that the strong performance of the non-agricultural sector in August has provided “labor market support” for interest rate hikes, but the final decision still needs to wait until next week's CPI data gives the “last piece of the puzzle” in terms of inflation. As far as the market is concerned, the Federal Reserve interest rate meeting on September 15-16 is bound to be a game full of suspense.