Job Market: 3 Charts Show Why Hiring Is Falling in the Second-Half

The job market is weakening.

That was clearly illustrated in in the dismal August jobs report, which badly missed expectations for hiring while the jobless rate inched higher. The US added 22,000 payrolls in the month, lower than the 75,000 economists expected.

Payrolls in previous months were also revised downward, with the economy losing around 13,000 jobs in June, according to the Bureau of Labor Statistics.

Less than half of industries in the US have been adding to job growth over the last six months, according to an analysis from Mark Zandi and Matt Colyar, two economists at Moody’s Analytics.

Economists say there are a few things driving the downturn in the labor market. These charts tell the story.

1. Tariffs

Job growth in the US has been battered due to concerns about President Donald Trump’s tariffs. Hiring dropped sharply among all firms around the time the trade war began, especially for companies in sectors impacted by tariffs. Those areas have lost jobs each month since May, according to an analysis from Apollo Global Management.

Tariffs are considered inflationary, as companies can pass along the cost of import duties by raising prices for consumers. But some firms could be forced to eat the cost of tariffs, while those that raise prices risk seeing sales decline as wary consumers pull back on spending.

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Nearly half of all businesses surveyed by the Dallas Fed in August said they had been negatively impacted by tariffs this year. 33% said they expected either a slight or significant decrease in their company outlook this year, and 18% said they had already or were planning to scale down operations or close shop.

“Labor market momentum is poised to remain subdued as firms—grappling with softer final demand, higher costs and interest rates, and elevated uncertainty—continue to restrain hiring,” Lydia Boussour, a senior economist at EY-Parthenon, wrote in a note, adding that she expected the unemployment rate to edge higher to 4.7% through the end of the year.

2. Immigration crackdown

Trump’s crackdown on immigration is also adding pressure to the labor market. That’s evident in how the number of foreign-born workers in the US has fallen in 2025, according to Ed Yardeni, a market veteran and the president of Yardeni Research.

The number of foreign-born workers in the job market has fallen by around 1.5 million since March, Yardeni said.

“Trump’s DOGE, tariff, immigration, and deportation policies are discombobulating the US labor market. They are certainly reducing the supply of foreign-born workers and causing employers to refrain from hiring them. The supply of workers may be a greater concern for the US economy than a weakened demand for labor,” he wrote in a note to clients on Sunday.

Supply-side factors impacting the labor market, like immigration policies, are also making it harder for businesses to find workers if they are hiring, according to Joe Brusuelas, a chief economist at RSM US.

“Pervasive uncertainty driven by these trade and immigration policies is the primary impetus behind reduced demand for workers,” Brusuelas said in a note, adding that he expected growth and hiring to improve later in the year.

3. Labor force participation

Fewer Americans are working or actively looking for a job, another factor that’s skewed the labor market toward a picture of weakness.

The proportion of men who are considered to be participating in the job market, either by working or looking for a job, outpaced women this year. Still, the labor force participation rate for both genders has declined in recent years, according to an analysis from Bank of America Institute.

The overall labor force participation rate ticked higher to 62.3% in August. That still remains below levels recorded prior to the pandemic, with the participation rate hovering around 63.3% in early 2020, according to Labor Department data.

“Growth rates have fallen below 2019 levels for both genders, signaling a cooling labor market,” Liz Everett Krisberg, the head of Bank of America Institute, and David Michael Tinsely, a senior economist at the institute, wrote in a note last week.

Meanwhile, the percentage of Americans who aren’t in the labor force but say that they still want a job has climbed, rising to 2.3% this year from around 1.8% in 2023, according to an analysis from Pantheon Macroeconomics.

“Both of these indicators are consistent with the idea that the rock-bottom hiring rate is discouraging many from even trying to look for a job. The unemployment rate would rise quickly if many in this group start looking for work and reclassify themselves as unemployed,” Samuel Tombs, the chief US economist at hte firm, wrote in a note.