Stagnation with a Smile: August Jobs “Changed Little,” But the Quality Metrics Didn’t

On 2025-10-20, the official press release led with a comfort blanket: “Total nonfarm payroll employment changed little in August.” That’s technically true at +22,000, but it sits awkwardly beside a BLS embargo date of 2025-09-05 and a slate of deteriorating internals. Under the headline calm, we see a cooling health care pillar, manufacturing down 78,000 over the year, persistent hours stagnation, and a household survey that quietly accumulated slack. The story is less “steady as she goes” and more “stalled at sea.”

- Headline payrolls +22,000 in August; momentum flat since April, reinforced by net -21,000 revisions for June/July (June flipped from +14,000 to -13,000).
- Manufacturing “changed little” at -12,000, yet it’s -78,000 YoY—a material deterioration the headline tone soft-pedals; transportation equipment -15,000 only “in part” due to strikes.
- Health care +31,000—still the anchor of gains—ran below its 12-month average of +42,000, a sign the primary support is cooling.
- Hours metrics signal stagnation: average workweek 34.2 hours (third month flat), manufacturing workweek 40.0 hours (down), overtime 2.9 hours (flat).
- Quality slippage despite a steady 4.3% unemployment rate: long-term unemployed +385,000 YoY to 1.9 million (25.7%); LFPR 62.3% and EPOP 59.6% both -0.4 pp YoY; those “not in the labor force who want a job” +722,000 YoY to 6.4 million.

The Data at a Glance

The Date Mismatch That Matters
A press release dated 2025-10-20 leaning on August data embargoed 2025-09-05 muddies the “latest” narrative. When the timing blurs, revisions become the compass—and they point south: June revised down by 27,000 (to -13,000), July up +6,000 (to +79,000), net -21,000. The trend since spring—“little change”—is accurate, but it’s stagnation, not stability.

Manufacturing: “Changed Little” Is Doing Heavy Lifting
Labeling August manufacturing -12,000 as “little change” while noting it’s -78,000 YoY understates the deterioration. The -15,000 in transportation equipment gets a strike footnote, but the broader decline predates the walkouts. Hours confirm the downshift: manufacturing workweek at 40.0 hours and 2.9 hours overtime scream slack.

Health Care: Still Carrying the Torch, But Dimmer
Health care’s +31,000 is the month’s ballast—yet it trails its +42,000 12‑month trend. When your most defensive engine decelerates, you don’t cheer the headline; you check the fuel lines.

Government, Trade, Mining: Broadening Drip
- Federal government: -15,000 in August, -97,000 since January—and remember, employees on paid leave/severance still count as employed.
- Wholesale trade: -12,000 in August, -32,000 since May—coincident with softening goods flow.
- Mining: -6,000, after a year of little change—an early-stage cyclical wobble.

Hours and Pay: Demand Plateaus, Pricing Power Ebbs
The average workweek stuck at 34.2 hours for the third month is one of the purest signs of tepid demand. Overtime flat at 2.9 hours and a trimmed manufacturing workweek confirm it. Wages rose 0.3% m/m to $36.53 (+3.7% y/y), with production/nonsupervisory +0.4% m/m to $31.46. Pay is not re-accelerating; it’s drifting down with the cycle.

Household Survey: Same Unemployment Rate, Worse Internals
The jobless rate sits at 4.3% with 7.4 million unemployed, yet the internals deteriorated:
- Long‑term unemployed +385,000 YoY to 1.9 million, now 25.7% of the unemployed.
- LFPR 62.3% and EPOP 59.6%, both -0.4 pp YoY.
- People not in the labor force who want a job +722,000 YoY to 6.4 million.
- Part‑time for economic reasons 4.7 million (little change).
- New entrants slipped -199,000 to 786,000, adding noise to a “steady” rate.
Omissions matter: no discussion of U‑6 (A‑15) or multiple jobholders (A‑16). Expect more slack than the headline implies.

Revisions and Benchmark Risk
Two‑month net revisions at -21,000 weaken the pre‑August narrative. Add the scheduled benchmark revision (preliminary 2025‑09‑09; final February 2026), and headline payroll levels are hardly anchored. This is not the time to set macro views by point estimates.

• Equities:

• Credit:

• Rates/FX:

Looking Ahead

• What to watch next month:

• CPI pass‑through: Slower hours and softer payroll breadth argue for disinflationary pressure from labor, though services stickiness could linger. Wage growth is no longer an accelerant.

• Policy tone: The “changed little” language signals tolerance for stagnation if inflation recedes. The risk isn’t a hike—it’s a longer wait for cuts unless growth slippage accelerates.

Conclusion
The 2025‑10‑20 release told a placid story; the tables did not. Payrolls +22,000 look harmless until you line up the negatives: manufacturing -78,000 YoY, hours stuck at 34.2, long‑term joblessness up 385,000, participation drifting lower, and revisions taking the shine off prior months. Strikes explain a slice of transportation equipment, not the cycle. For investors:
- Don’t buy the headline—buy the internals.
- Tilt toward balance‑sheet strength in defensives; be selective in health care.
- Fade goods‑centric cyclicals until hours turn.
- Add measured duration; position for curve steepening on ongoing labor softening.
- Expect more revision‑driven volatility—keep dry powder for dislocations around employment releases.

Headlines say steady. The data say stall. Position for the stall.