Federal Reserve Bank of St. Louis
09/05/2025 | News release | Distributed by Public on 09/05/2025 16:28
Flash Report: August Jobless Rate Rises as Employment Conditions Soften Further
The Flash Report periodically highlights notable economic data releases. This analysis is part of ongoing work by St. Louis Fed economists to understand the U.S. and regional economy.
KEY TAKEAWAYS
- The U.S. unemployment rate ticked up to 4.3% in August from 4.2% in July. More precise data show the rate rose to 4.324% from 4.248%, respectively.
- The rise in August's reading is primarily explained by two factors: An increase in the number of people not previously in the labor force who began looking for work last month, and fewer unemployed workers finding jobs.
- Persistently weak hiring since May has coincided with declining growth in the labor supply, helping to stabilize the unemployment rate.
Unemployment
August 2025
4.324%
Precise Rate
The unemployment rate has ticked up modestly in the last two months-from 4.1% in June to 4.2% in July to 4.3% August-continuing its gradual upward trend. (See the FRED chart above.) The August reading stands at 0.6 percentage points higher than the unemployment rate's monthly average in 2019, though it is still historically low.
August payrolls rose by only 22,000, indicating a pronounced weakness in job growth. After minor revisions to June and July payroll numbers, job creation has averaged only 27,000 a month in the past four months, representing a more sluggish pace of hiring.
The following analysis focuses on how estimated flows into and out of unemployment during August affected the overall unemployment rate.
DATA HIGHLIGHTS
- While the headline unemployment rate rose to 4.3% in August from 4.2% in the month prior, the unrounded rate shows a slightly smaller increase of 0.08 percentage points.
- People previously not in the labor force who began seeking work and fewer unemployed workers able to find jobs drove the increase in the unemployment rate.
Breaking Down the Monthly Change in Unemployment
|
Average Monthly Change in Unemployment Rate (Percentage Points) |
People Losing or Leaving Their Jobs and Becoming Unemployed |
Unemployed People Finding Jobs |
People Previously Not in the Labor Force Who Are Now Seeking Work |
Unemployed Workers Leaving the Labor Force (e.g. Discouraged Workers) |
|
| August 2025 | +0.08 | +0.94 | -1.05 | +1.17 | -0.99 |
| Last 3 Months | +0.03 | +0.98 | -1.11 | +1.13 | -0.98 |
| Last 12 Months | +0.01 | +0.94 | -1.07 | +1.08 | -0.96 |
| SOURCES: Bureau of Labor Statistics and Research staff's calculations. | |||||
| NOTES: Data are seasonally adjusted. The overall change is based on the precise unemployment rate for these periods; for example, the unemployment rates were 4.3237% in August and 4.2479% in July. The flow components into and out of unemployment add up to the change in unemployment with a negligible residual. See Maximiliano Dvorkin and Serdar Ozkan's St. Louis Fed On the Economy blog post "The Recent Ins and Outs of Unemployment: Using Flows to Study Labor Market Dynamics" for more information about this method. | |||||
Despite anemic job growth in the past four months, the unemployment rate increased very modestly during that period. This relative stability reflects a significant decline in the growth of U.S. labor supply; the labor force participation rate fell from 62.6% in May to 62.3% last month, and there were fewer foreign-born workers during that time.
The modest rise in August's unemployment rate primarily resulted from two factors: people moving from outside the labor force into unemployment (rather than directly into jobs) and fewer workers who were unemployed successfully finding jobs. These two components of unemployment flows remained within their typical range of month-to-month variation. Other components of unemployment flows tracked near their 12-month averages. (See the table above.)
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