August Jobs Report Expected to Show Moderate Hiring Gains

Key Takeaways

• Economists predict that the August 2025 jobs report will show moderate job growth.
• Unemployment is expected to have held steady at 4.2%.
• With job growth slowing, the Federal Reserve is seen as cutting interest rates in September.

Economists forecast the August jobs report will show hiring picking back up to a moderate pace of growth, with the unemployment rate staying stable.

Nonfarm payrolls are predicted to have expanded by 110,000, up from 73,000 in July, according to consensus estimates from FactSet. The July report featured significant downward revisions to job growth, with fewer than 20,000 jobs created in both May and June.

“We’re expecting a reacceleration in hiring,” says José Torres, senior economist at Interactive Brokers.

Torres predicts the labor market added a higher-than-consensus 140,000 jobs in August. “A lot of our real-time indicators showed a floor back in July, so we’re expecting job growth [to have] recovered pretty nicely,” he says.

“An uptick in relative certainty is supporting the business environment’s desire to hire,” says Torres, who adds that the progress made over trade deals since Trump’s initial tariff announcements has removed some of the worst-case scenarios for businesses, leaving them more willing to invest and hire.

Jeff Roach, chief economist at LPL Financial Research, isn’t as optimistic and predicts that payrolls only expanded by 50,000 in August.

“I think the employment report is going to show a slower economy,” cautions Roach, who says hiring may be sluggish, but major job losses are also unlikely. “Firms still have a memory of struggling to hire over the last few years, and that is going to make people less likely to fire, but also probably less likely to hire due to a slowing economy, so we’re going to have sort of a cap in both directions.”

August Jobs Report Forecast Highlights

• Job report release date and time: Friday, Sept. 5, at 8:30 a.m. Eastern time.
• Nonfarm payroll employment is forecast to increase by 110,000 versus the 73,000 rise in July, according to FactSet.
• The unemployment rate is forecast to stay steady at 4.2%.
• Hourly earnings are projected to rise 0.3%, the same as in July.

Potential Areas of Strength in August Hiring

While Torres says healthcare will continue to be a major driver of jobs growth, a new trend he expects to see in the August report is an uptick in hiring from discretionary sectors, especially leisure and hospitality.

“Everyone’s been really worried about the potential for tariff-fueled inflation influencing goods, but we saw the inflation with services, and that points to buoyant consumer demand,” Torres says. “I think employers are going to have to catch up by hiring more workers. So, look for strength in leisure and hospitality, because those discretionary sectors are coming back.”

LPL’s Roach thinks labor market gains will instead come from manufacturing because of the passage of the most recent budget bill. The law reintroduced an accounting change called accelerated depreciation, which translates into a substantial tax break for capital-intensive industries, like manufacturing.

Both economists predict the financials sector will have added jobs in August.

Weak Spots in the Labor Market

Torres predicts that the major areas of weakness in the jobs market in August were manufacturing, mining, and construction. He says that high interest rates will continue to weigh on both manufacturing and construction, while lower commodity prices continue to hurt the mining industry.

“When you look at what’s happening in construction and the real estate sector from a groundbreaking perspective, as well as from a transaction, price growth, and rent growth perspective, it’s been terrible,” Torres says.

Roach predicts that the leisure and hospitality sectors won’t have added many jobs in August. He thinks the uptick in consumer spending represents demand being “pulled forward” from later in the year, as consumers spend before the full impact of tariffs hits later this year.

Roach also expects that it was rates, which the Fed has kept steady so far in 2025, that continued to hurt hiring in the construction industry.

Fed Seen Cutting Interest Rates in September

Futures markets currently put the likelihood of a 0.25 point interest rate cut at the Fed’s September meeting at 92%, according to CME FedWatch. Fed Chair Jerome Powell highlighted risks of a weakening job market at his recent speech in Jackson Hole, Wyoming.

Torres thinks there would have to be a dramatic shift in both job growth and inflation for the Fed not to cut rates in September. “If the August CPI comes in at 3% and job gains are over 200,000, then that’ll take September off the table,” he says.

Both Torres and Roach predict that the Fed will cut rates in September, but future cuts are less certain.

“I think what they’ll do is cut September and December,” Roach says. “The real wild card is October, because I don’t know if we’re going to see enough weakness show up in the economy by the time the Fed meets in October.”