U.S. Unemployment Rate Rises to Near Four-Year High in August

By ariachiang

2025-09-08

In August, the U.S. unemployment rate rose to 4.3%, up from 4.2% in July, marking the highest rate since October 2021, signaling notable labor market softening. Nonfarm payroll employment increased by only 22,000 jobs, significantly below the economists' forecast of 75,000, while June’s employment was revised downwards to a net loss of 13,000 jobs, indicating a stalling trend since April. Overall, the labor market showed weak job growth alongside a slight rise in unemployment during August.

Key figures include:

  • Unemployed persons reached approximately 7.4 million in August, increasing by about 148,000 from July;
  • Labor force participation rate edged up marginally from 62.2% in July to 62.3%, still near historical lows;
  • Broader U-6 unemployment rate, including underemployed and discouraged workers, climbed from 7.9% to 8.1%;
  • Job gains in healthcare somewhat offset losses in federal government and mining, quarrying, and oil and gas extraction sectors;
  • Unemployment rates for major demographic groups remained relatively steady: adult men at 4.1%, adult women 3.8%, teenagers 13.9%.

In summary, the U.S. labor market showed clear signs of weakness in August, with job growth slowing considerably and unemployment rising. The stock market responded positively, opening higher as investors anticipated that the Federal Reserve would cut interest rates this month to stimulate the economy. Specifically, the Dow Jones Industrial Average, S&P 500, and Nasdaq all rose at the opening, while bond yields dropped sharply. Market expectations for a rate cut in mid-September surged, with futures pricing in a 100% probability of a quarter-point cut and a 12% chance of a half-point cut. In the short term (1-2 months), rate cuts are expected to be the primary driver supporting the market. In the medium term (within six months), close attention will be needed on the economic data and policy effectiveness amid ongoing global economic uncertainties, which may keep market volatility elevated.

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