The US economy rebounded strongly in August 2026, adding 162,000 jobs according to the Bureau of Labor Statistics, well above the 56,000 estimate from economists polled by LSEG. The unemployment rate held steady at 4.1%, providing fresh evidence that the labor market remains resilient despite broader economic uncertainty.
Private payrolls accounted for 127,000 of the new positions, far exceeding the 45,000 estimate. Government payrolls added 35,000 jobs, led by local government education roles. The manufacturing sector contributed 16,000 jobs, while food services and drinking places added 59,000 — well above the sector’s average monthly gain of 12,000 over the past year.
Revisions to prior months were also positive. June’s payroll figure was revised up by 11,000 to 31,000, while July’s initially reported loss of 23,000 jobs was revised to a gain of 21,000. Taken together, employment in June and July was 55,000 higher than previously reported.
For Houston, the report carries particular significance. The metro area’s energy sector, healthcare employers, and construction industry all stand to benefit from sustained labor demand. Average hourly earnings rose 3.1% year over year in August, above the 3% estimate, a positive signal for consumer spending in the Greater Houston area.
However, the report also increased market expectations of a Federal Reserve rate hike. The probability of a 25 basis point increase at the Fed’s mid-September meeting rose to 60.4%, up from 49.4% the prior day, according to the CME FedWatch tool. Higher rates could affect Houston’s housing market and business investment climate.
Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, noted that ‘an upside surprise in payrolls will likely ramp up concerns about a rate hike, but that outcome is in the hands of next week’s inflation numbers.’
The labor force participation rate ticked up to 61.6% in August, though it remains down 0.5 percentage points since January. Long-term unemployment stayed at 1.9 million, accounting for 27% of all unemployed persons.
Source: Fox Business
