The U.S. labor market rebounded in August, with nonfarm payrolls increasing by 162,000 and upward revisions adding 55,000 jobs to June and July. The unemployment rate held steady at 4.1%, as both employment and the labor force participation rate rose over the month. August’s gain leaves just five outright monthly declines in payrolls over the past year and a half, with the most recent occurring in February. While the strength reported for the labor market is positive, today’s data increases the probability of a Federal Reserve rate hike in the near future.
Wage growth continued to cool, with average hourly earnings rising 3.1% year over year in August, down from 3.2% in July and marking the slowest pace of 2026. Average hourly earnings reached $37.75. Meanwhile, a recent sharp increase in energy and gasoline prices, driven by conflicts in the Middle East, has pushed inflation higher even as wage growth has slowed.
National Employment
According to the Employment Situation Summary reported by the Bureau of Labor Statistics (BLS), total nonfarm payroll employment increased by 162,000 in August, following an upwardly revised gain of 21,000 in July. Revisions to prior months were broadly positive, reversing two straight months of downward revisions. The change for June was revised up by 11,000, from the +20,000 reported last month to +31,000, while the change for July was revised up by 44,000, from a preliminary decline of 23,000 to a gain of 21,000. Combined, these revisions added 55,000 jobs to previously reported totals, compared with the 103,000 downward revisions reported in the prior month.
Job growth in 2026 has picked back up. Through August, monthly payroll gains have averaged 80,000 on the current data vintage, up from the 61,000 pace reported through July, reflecting both August’s strong print and the upward revisions to June and July. This compares with an average of just 10,000 per month in 2025 and 122,000 per month in 2024. Over the past 12 months, total nonfarm employment has grown by 603,000, a modest acceleration from the pace of expansion reported over the summer.
The unemployment rate held at 4.1% in August, unchanged from July and 0.2 percentage points below its year-ago level of 4.3%. Over the month, the number of employed persons rose by 569,000, while the number of unemployed persons increased by 115,000. Combined, the civilian labor force expanded by 683,000 in August.
Meanwhile, the labor force participation rate—the proportion of the population either looking for a job or already holding a job—rose 0.2 percentage points to 61.6% in August. It remains well below its pre-pandemic level of 63.3% recorded at the start of 2020. Among prime working-age individuals (aged 25 to 54), the participation rate held at 83.4%, matching July’s level.
Employment gains in August were led by food services and drinking places, which added 59,000 jobs, followed by local government education, with an increase of 42,000. Health care employment continued to trend upward, adding 13,000 jobs, while manufacturing employment also expanded by 16,000. These gains were partially offset by a 23,000 decline in information.
Construction Employment
Employment in the overall construction sector rose by 22,000 jobs in August, following a gain of 18,000 in July. Within the industry, residential construction employment increased by 10,700, its strongest monthly gain in more than a year, while non-residential construction added approximately 10,400 jobs. The gain for residential construction in August is out of sync with other building data and may be subject to a downward revision in future reports.
Residential construction employment stood at 3.3 million in August, including 923,700 workers employed by builders and remodelers, up from 916,400 in July, and 2.3 million residential specialty trade contractors.
The six-month moving average of job gains for residential construction employment remained negative in August but improved to an average monthly loss of approximately 1,233 jobs, compared with a loss of roughly 5,617 jobs in July. Over the last 12 months, residential construction has shed a net of 19,800 jobs, marking the eighteenth consecutive month of year-over-year decline. Despite these losses, residential construction employment remains 1,290,300 positions above its post-Great Recession low. This cushion widened from 1,279,600 in July, reflecting August’s employment gain.
Meanwhile, the unemployment rate for construction workers fell to 4.1% in August on a seasonally adjusted basis, down from 4.6% in July and its lowest reading since April. After several months of volatility, the construction unemployment rate has returned to roughly its year-ago level, suggesting that labor market conditions in construction have stabilized.
