U.S. job growth slows sharply in July as labor market weakens
The U.S. economy added just 73,000 jobs in July, falling short of already-muted expectations and signaling growing weakness in the labor market. In a further blow, job gains for May and June were revised sharply downward, wiping out a combined 258,000 positions.
July’s total came in below the 100,000 job increase forecasted by Dow Jones economists, although it exceeded June’s now-revised figure of just 14,000 jobs. May’s numbers were slashed to 19,000 from the previously reported 144,000, News.Az reports, citing foreign media.
Meanwhile, the unemployment rate ticked up to 4.2%, in line with expectations. But the household survey, used to calculate that figure, showed an even more troubling decline of 260,000 workers, and the labor force participation rate edged down to 62.2%, the lowest since November 2022.
“This is a gamechanger jobs report,” said Heather Long, chief economist at Navy Federal Credit Union. “The labor market is deteriorating quickly.”
Stock futures and Treasury yields fell after the report. Traders now see a 63% chance of a Fed rate cut in September, up from 40% the day before.
Most job gains in July came from the healthcare sector (+55,000) and social assistance (+18,000). Government employment, however, declined again, shedding 12,000 jobs in July and down 84,000 since January amid staffing cuts driven by the new Department of Government Efficiency under Elon Musk.
Average hourly earnings rose 0.3% in July, as expected.
Year-over-year wage growth hit 3.9%, slightly above forecasts.
The broader unemployment rate, which includes discouraged and underemployed workers, climbed to 7.9%, the highest since March.
Amid rising signs of an economic slowdown, President Donald Trump renewed pressure on the Federal Reserve to slash rates. In a post on Truth Social, Trump lashed out at Fed Chair Jerome Powell:
“Jerome ‘Too Late’ Powell, a stubborn MORON, must substantially lower interest rates, NOW.”
Despite Trump’s criticism, the Fed held rates steady at its latest meeting on Wednesday, keeping the benchmark rate unchanged since December 2024.
While the U.S. economy grew at a 3% annualized rate in Q2, analysts caution that the gain was inflated by front-loaded inventory imports ahead of Trump’s April tariff hike. Core demand remains soft, and consumer spending continues to lag.
Similar news
