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By Scott McIntyre
Co-Head of Investment Management
HilltopSecurities Asset Management
U.S. companies added +162k jobs last month, nearly triple the median forecast, while revisions to the June/July count added another +55k. The highest nonfarm payroll forecast in the most recent Bloomberg survey was +125k, as all 76 economists fell well short of the actual reading. This unexpected rebound boosted the three-month average to a respectable +71k. A month ago (before revisions) the average had been a tepid +20k.
August job gains were widespread, with notable increases in closely-watched sectors. In particular, construction companies added +18k workers following a +22k gain in July, while manufacturing companies added +16k, the most since 2023.
The leisure and hospitality sector rebounded sharply in August (+62k) following two consecutive months of rare negative growth. Local government education, reflecting the new school year, added +42k. Health care hiring was uncharacteristically light in August, up just +13k.
Information technology was one of few sectors performing poorly last month, shedding -23k positions.
In the separate household survey, the unemployment rate held steady at 4.1% as the number of employed workers rose by +569k while an additional +115k Americans began seeking work. This combined to boost the civilian labor force by +683k. Although the August headline number was unchanged, the underlying data indicated dramatic improvement from the previous report, which was mainly the result of fewer active jobseekers.
The broader U6 underemployment rate, which includes temporary workers preferring fulltime, as well as those who would like a job, but had not looked for work in past month, fell to 7.7%, matching an 18-month low.
Improved labor conditions typically pressure wages, but wage gains were relatively well-behaved as hourly earnings climbed +0.3% for the month and +3.1% for the year.
Several early headlines described this morning’s report as a “blockbuster.” Although that might be a stretch, it was indeed a solid report. From the Fed’s perspective, apparent improvement in the labor market should bolster the case for a rate increase in 2026. However, the August CPI and PPI reports, scheduled for release next week, will determine the liveliness of the September FOMC meeting. The futures market is now indicating a 61% probability of a 25 bp increase in the overnight funds target later this month, up from 51%.
About Scott McIntyre, CFA
As HilltopSecurities Asset Management’s Co-Head of Investment Management, Scott McIntyre specializes in investment management services and is responsible for the management, oversight and trade supervision of more than $30 billion in institutional fixed income assets for HilltopSecurities’ public sector municipal clients. Scott also provides investment advice and consulting, reviews local government investment policies, formulates overall investment strategies, evaluates account performance and oversees the day-to-day operations. He is a member of the Chartered Financial Analyst (CFA) Institute and a CFA Charterholder, a two-term advisor to the GFOA Treasury and Investment Management (TIM) committee, a Registered Investment Advisor, and holds FINRA Series 7, 24, 63, and 65 licenses.
About Greg Warner, CTP
As HilltopSecurities Asset Management’s Co-Head of Investment Management, Greg Warner specializes in investment management services and is responsible for the management and oversight of more than $30 billion in institutional fixed income assets for HilltopSecurities’ public sector municipal clients. Greg coordinates all client services and portfolio management duties, including security evaluation and portfolio analysis, trading, investment reporting, board presentations, and monitoring of broker-dealer relationships. He is an advisory committee member to the Texas Association of Counties, a member of the Government Treasurers’ Organization of Texas (GTOT), a Registered Investment Advisor, a Certified Treasury Professional (CTP) and holds FINRA Series 7, 63, and 65 licenses.
About Matt Harris, CFA
As HilltopSecurities Asset Management’s Senior Portfolio Advisor, Matt Harris specializes in investment management services for public sector municipal clients. He developed his experience in the banking industry, supporting balance sheet management, interest rate risk analysis, liquidity planning, and investment strategy implementation. At HilltopSecurities, he works closely with clients to develop and implement customized investment strategies, oversees account documentation and reporting, and assists clients with the public funds depository review process, including competitive RFP evaluations. Harris is a member of the CFA Institute and a CFA Charterholder, a Registered Investment Advisor, and holds FINRA Series 7, 63, and 66 licenses.
The paper/commentary was prepared by HilltopSecurities Asset Management (HSAM). It is intended for informational purposes only and does not constitute legal or investment advice, nor is it an offer or a solicitation of an offer to buy or sell any investment or other specific product. Information provided in this paper was obtained from sources that are believed to be reliable; however, it is not guaranteed to be correct, complete, or current, and is not intended to imply or establish standards of care applicable to any attorney or advisor in any particular circumstances. The statements within constitute the views of HTS and/or HSAM as of the date of the document and may differ from the views of other divisions/departments of Hilltop Securities Inc. and its affiliates. In addition, the views are subject to change without notice. This paper represents historical information only and is not an indication of future performance. Sources available upon request.
HilltopSecurities Asset Management is an SEC-registered investment advisor. Hilltop Securities Inc. is a registered broker-dealer, registered investment adviser and municipal advisor firm that does not provide tax or legal advice. HTS and HSAM are wholly owned subsidiaries of Hilltop Holdings, Inc. (NYSE: HTH) located at 717 N. Harwood St., Suite 3400, Dallas, Texas 75201, (214) 859-1800, 833-4HILLTOP.