There was a sharp spike in job cuts during August, according to new data, as employers shed staff due to a worsening economic outlook. A separate report also showed a weaker-than-expected number of new jobs added by private employers.
The numbers are a blow to President Donald Trump, who claims the American economy is the hottest it has been in years since he took office and has attracted trillions of dollars of inward investment.
A worsening jobs picture, however, brings closer to reality Trump’s demand that the Federal Reserve cut interest rates to stimulate the economy. Slack in the jobs market eases some of the Fed’s concerns about fueling inflation with a rate cut.
Challenger Job Cuts Data
U.S.-based employers cut 85,979 jobs in August, up 39 percent from July, said outplacement firm Challenger, Gray & Christmas in its monthly report.
This was the highest August reading since 2020 during the height of the coronavirus pandemic. It is also the sixth month this year in which job cuts have been higher than the same period a year ago.
The biggest job-cutting sectors were pharmaceuticals and finance.
Companies have shed 892,362 jobs so far in 2025, the highest year-to-date figure since 2020, Challenger, Gray & Christmas said.
“After the impact of DOGE on the Federal Government, employers are citing economic and market factors as the driver of layoffs,” said Andrew Challenger, senior vice president and labor expert for Challenger, Gray & Christmas.
“We’ve also seen a spike in cuts due to operation or store closings and bankruptcies this year compared to last.”
People line up as they wait for the Mega JobNewsUSA South Florida Job Fair to open at the Amerant Bank Arena on April 30, 2025, in Sunrise, Florida.
People line up as they wait for the Mega JobNewsUSA South Florida Job Fair to open at the Amerant Bank Arena on April 30, 2025, in Sunrise, Florida.
Joe Raedle/Getty Images
ADP Jobs Data
In a separate report, ADP Research said that private employers added 54,000 jobs in August, a figure significantly weaker than analysts had expected.
Leisure and hospitality, as well as construction, were the strongest-performing sectors in a broadly weak month, ADP said.
It compares to 106,000 jobs added in July.
Dr. Nela Richardson, chief economist at ADP, noted that the year had started with strong job growth, “but that momentum has been whipsawed by uncertainty.”
“A variety of things could explain the hiring slowdown, including labor shortages, skittish consumers, and AI disruptions,” Richardson said.
Grim Jobs Data Points to Rate Cut
Bureau of Labor Statistics data earlier showed that U.S. employers were advertising 7.2 million job openings at the end of July, fewer than economists had forecast and another sign of a weakening labor market.
A grim July jobs report, which included massive downward revisions for June and May, sent financial markets spiraling and prompted Trump to fire the head of the agency that compiles the monthly data.
Lower interest rates could give the job market and overall economy a boost. The downside is that they can also push inflation higher when Trump’s tariffs may already be raising prices for all kinds of imports.
This article includes reporting by The Associated Press.
Update 9/4/25, 9:25 a.m. ET: This article was updated with additional information.