Editor’s Note: Article updated with additional content.

The U.S. economy created 162,000 jobs in August, sharply beating estimates of 56,000 and pointing to strengthening labor market conditions.

Private payrolls rose by 127,000, while government payrolls added 35,000, the Bureau of Labor Statistics said Friday,

The overall increase in total non-farm payrolls marked a rebound from July’s 21,000, revised up from an initially reported loss of 23,000.

The unemployment rate held at 4.1%, matching expectations.

Average hourly earnings rose 0.3% month-over-month, matching forecasts, taking the annual pace to 3.1% from 3.2% in July.

Fed rate hike odds surged immediately after the release.

Where Jobs Were Added Last Month

June was revised up by 11,000 to a gain of 31,000, and July’s reported loss of 23,000 became a gain of 21,000, an upward revision of 44,000.

Together, the two months are 55,000 higher than previously reported.

Two categories supplied 101,000 of the 162,000 jobs.

Food services and drinking places added 59,000, well above the 12,000 monthly average of the prior year.

Local government education added 42,000, which the BLS explicitly described as largely offsetting the prior month’s decline and showing little net change since January 2025.

The weak spots were concentrated. Information shed 23,000 jobs, against average losses of 8,000 a month over the prior year, with declines in computing infrastructure providers, data processing and web hosting of 8,000, publishing of 7,000 and broadcasting and content providers of 5,000.

Health care added 13,000, well below its 32,000 monthly average.

Manufacturing added 16,000.

Yields Jump, Stocks Slip As Job Beat Revives The Hike Case

The bond market answered first, and it answered in one direction.

The 2-year Treasury yield, the maturity that tracks Fed expectations most closely, snapped from 4.34% to an intraday high of 4.425% within seconds of the release.

The 10-year yield climbed to 4.794%, a gain of roughly three basis points, after touching 4.812%.

The curve flattened. Short rates moved twice as much as long rates, which is the textbook signature of a market pricing near-term tightening rather than a term-premium problem.

The U.S. Dollar Index reversed Thursday’s Fed Governor Christopher Waller-driven slide, rising 0.33% to 99.236 after touching 99.392.

Gold took the harder hit. December COMEX futures fell 2.23% to $4,438.50, down $101.40 on the session, while spot gold dropped 1.79% to roughly $4,389 an ounce.

Stock futures turned lower on the report, unwinding some of the gains from a strong Thursday session.

S&P 500 futures slipped 0.30% to 7,737.35, Nasdaq 100 futures fell 0.45% to 29,497.74 and Dow futures declined 0.24% to 53,564.14.

Thursday had been the best session for the Dow Jones Industrial Average since Aug. 4, with the index up 624 points, or 1.18%, after Waller’s remarks.

The S&P 500 – tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) – gained 1.06% to close at 7,747.71 on Thursday and the Nasdaq Composite added 1.40%.

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