When President Trump last month fired the head of the federal bureau that produces the government’s monthly jobs report after the numbers pointed to a slump in U.S. hiring, he drew rebukes from critics who accused him of politicizing a technical — and nonpartisan — data collection process.
On Friday, the Labor Department is set to release employment figures for August in what could emerge as another possible flashpoint.
The new payroll report comes at a critical juncture for the economy. Recent data suggests the labor market is cooling, a particular concern as workers and businesses head into the crucial holiday spending period. The Federal Reserve later this month is also expected to cut its benchmark interest rate for the first time since December 2024 as it swivels from fighting inflation to shoring up job growth.
Meanwhile, the August employment report will be the first since Mr. Trump ordered the dismissal of former Bureau of Labor Statistics Commissioner Erika McEntarfer and questioned the Labor Department’s competence in tracking the rate of job-creation across the U.S.
In the aftermath, economists expressed concern that Mr. Trump’s move could undermine confidence in the accuracy of U.S. economic data — a benchmark for the global economy. Any further actions by the Trump administration to question the accuracy of the monthly jobs data could sow further doubt about its validity, Gregory Daco, chief economist at strategy consulting firm EY-Parthenon, told CBS MoneyWatch.
What happened last month
Employers added only 73,000 jobs in July, the government reported last month — a figure that fell far short of economist forecasts and that led Mr. Trump to express “shock” over what appeared to be a sudden downturn in hiring. Also troubling was that the Labor Department sharply revised down how many jobs the economy added in May and June, a sign the economy was weaker than previously thought.
Such revisions are common, according to economists. The U.S. has roughly 160 million workers, making it impossible for the Bureau of Labor Statistics to tally each job every month. Instead, Labor Department staff draws on available data to estimate hiring and layoffs, while also revising their estimates for seasonal factors.
Still, the Labor Department’s July recalculation of the pace of job growth was noteworthy for its scale, representing the largest two-month downward revision since 1968.
“The previous report was obviously shocking in the sense of the downward revisions for the previous two months, and really caused a reckoning in the sense of needing to view hiring in a new light — and obviously not in a positive light,” Mark Hamrick, senior economic analyst at Bankrate, told CBS MoneyWatch.
Indeed, the disappointing numbers were the clearest sign to date this year that the job market could be starting to sputter as the impact of the Trump administration’s tariffs and general economic uncertainty weigh on employers.
What to expect from the August job numbers — and beyond
The August jobs data will provide a crucial measure of whether the labor market is holding up or running out of steam, as recent data suggests. The year started off strong, with an average monthly payroll gain of 123,000 from January to April — well above the number required to keep the nation’s unemployment rate, now at 4.2%, from rising.
However, the job market has stalled in recent months, with an average payroll gain from May to July of only 35,000. For the first time since April of 2021, the U.S. now has more unemployed people, at 7.24 million, than the 7.18 million jobs open around the country, according to labor data released on Wednesday.
“This is yet another data point underscoring how this job market is frozen, and it’s difficult for anyone to get a job right now,” Heather Long, chief economist at Navy Federal Credit Union, said in an email. “This is a turning point for the labor market. It’s yet another crack.”
Economists polled by financial data firm FactSet projected that employers added 80,000 jobs in August, with the unemployment rate expected to hold steady at 4.2%. A figure around or exceeding that level would alleviate fears that the job market is cratering.
Daco, who forecasts a much more moderate gain of 40,000 jobs in August, said in a research note this week that the employment report on Friday is “likely to confirm that a marked slowdown in labor market conditions is underway.”
Another important marker to look for in the latest job figures will be whether the Labor Department revises the payroll gains for July, as it did for May and June.
“Since every month in 2025 has been revised lower so far, the risk is that July job growth will also be marked down,” Shruti Mishra, a U.S. economist at Bank of America Global Research, said in a report. “This could point to more sustained labor market weakness than we have been forecasting.”
Moving forward, Daco predicts payroll gains will average around 30,000 per month through the end of the year and for the nation’s jobless rate to reach 4.7% by December.
“Looking ahead, the labor market slowdown is likely to persist,” he said.
What could the jobs report mean for a Fed rate cut?
The Federal Reserve has held off on lowering interest rates as it tries to finish the job of extinguishing the raging inflation that scorched consumers during the pandemic and to assess the impact of steeper tariffs on the economy.
Fed Chair Jerome Powell signaled last month that there might be an opening for a cut in September as downside risks to employment increase. Another month of weak or flat job growth would reinforce this outlook and likely keep the central bank on track for a cut at the Fed’s next policy meeting on Sept. 16-17, according to many economists.
“The report would have to be significantly stronger than we are forecasting to dissuade the [Fed] from cutting rates,” Oxford Economics said in a recent report.
As of Sept. 3, traders see a 95% probability that the Fed will lower its benchmark rate by a quarter of a percentage point, according to the CME Group’s FedWatch tool.
Mary Cunningham
Mary Cunningham is a reporter for CBS MoneyWatch. Before joining the business and finance vertical, she worked at “60 Minutes,” CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program.
