US jobs report beats forecasts, revives September Fed rate hike bets

September 4, 2026 at 08:00 PM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

The US economy added 162,000 nonfarm jobs in August, far above the 56,000 forecast, the Bureau of Labor Statistics reported. Wall Street futures turned lower as investors revived bets on a Federal Reserve rate hike at the September 15-16 meeting. The strong data shifted market focus back to inflation after softer comments from Fed Governor Christopher Waller had eased rate expectations.

Key Facts

US nonfarm payrolls rose by 162,000 in August, exceeding the market forecast of about 56,000.
The unemployment rate held at 4.1% in August.
July payrolls were revised to a gain of 21,000 from a previously reported decline of 23,000.
The probability of a Fed rate hike at the September 15-16 meeting rose to about 60-65% after the jobs report.
Restaurants and other food service establishments added about 59,000 jobs in August.

Jobs Report Surprise

The Bureau of Labor Statistics reported that US nonfarm payrolls increased by 162,000 in August, far above the market expectation of about 56,000. The unemployment rate remained at 4.1%. July payrolls were revised to a gain of 21,000 from a previously reported decline of 23,000. The revision changes the picture of the last two months from a sharp labor market deterioration to a weak July followed by a strong August recovery. Employment rose particularly in food services and local government education, while the information sector shed jobs.

Market Reaction

Before the report, US futures were mostly higher, with Nasdaq 100 up about 0.4% and S&P 500 near the previous close. By 08:33 Eastern time, Dow Jones futures were down 0.28% and S&P 500 futures down 0.22%, while Nasdaq 100 held a marginal gain of about 0.07%. The strong labor market gives the Federal Reserve more room to fight inflation with high rates, which pressured equities. Treasury yields rose as investors priced in a longer period of tight monetary policy or another rate hike. Higher yields increase the attractiveness of bonds and raise the discount rate for future corporate earnings, a sensitive point for stocks.

Rate Hike Probability

A day before the jobs report, Fed Governor Christopher Waller said on September 3 that he was ready to support keeping rates unchanged if incoming data confirmed easing inflation pressure. Waller did not rule out a rate hike at the September 15-16 meeting if the opposite scenario materialized. After Waller's comments, the probability of a September hike fell from about 63% to 50%. The unexpectedly strong jobs report reversed market expectations, lifting the probability of a hike to about 60-65% depending on the calculation moment. The main question for Wall Street shifted from the state of the labor market back to inflation.