73K Jobs Added in July as Hiring Slows The labor market is slowing as President Donald Trump unleashes a slew of new tariffs.

 

U.S. employment growth slowed more than expected in July, while the nonfarm payrolls count for the prior two months was revised down by a massive 258,000 jobs, pointing to a deterioration in labor market conditions that puts a September interest rate cut by the Federal Reserve back on the table.

The Labor Department's closely watched employment report on Friday also showed the unemployment rate rose to 4.2% last month amid a decline in the volatile household employment segment. People also continued to leave the labor force, though the pace slowed from the prior months.

The U.S. central bank on Wednesday left its benchmark interest rate in the 4.25%-4.50% range. Fed Chair Jerome Powell's comments after the decision undercut confidence that the central bank would resume policy easing in September as had been widely anticipated by financial markets and some economists.

Job growth has slowed amid uncertainty over where President Donald Trump's tariff levels will eventually settle. Trump on Thursday slapped dozens of trading partners with steep tariffs ahead of a Friday trade deal deadline, including a 35% duty on many goods from Canada. The labor market is weakening at a time when tariffs are starting to boost inflation.

"The door to a Fed rate cut in September just got opened a crack wider," said Christopher Rupkey, chief economist at FWDBONDS. "The labor market is not rolling over, but it is badly wounded and may yet bring about a reversal in the U.S. economy's fortunes.

Nonfarm payrolls increased by 73,000 jobs last month after rising by a downwardly revised 14,000 in June, the fewest in nearly five years, the Labor Department's Bureau of Labor Statistics said. Economists polled by Reuters had forecast payrolls would increase by 110,000 jobs after rising by a previously reported 147,000 in June. Estimates ranged from no jobs added to an increase of 176,000 positions.

A column chart titled "Monthly change in US jobs" that tracks the metric over the past year.

Payrolls for May were slashed by 125,000 to only a gain of 19,000 jobs. The BLS described the revisions to May and June payroll data as "larger than normal."

It gave no reason for the revised data but noted that "monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors."

Job gains in July continued to be concentrated in the healthcare sector, which added 55,000 positions. Social assistance employment increased by 18,000 jobs.

But federal government employment dropped by another 12,000 positions and is down 84,000 since peaking in January. More job losses are likely after the Supreme Court gave the White House the green light for mass firings as Trump seeks to slash spending and headcount. But the administration has also said several agencies were not planning to proceed with layoffs.

Financial markets expect the Fed to resume its monetary policy easing next month after pushing back rate cut expectations to October in the wake of Wednesday's policy decision.

The dollar fell versus a basket of currencies. U.S. Treasury yields dropped.

A bar chart that ranks the number of jobs added or lost in the most recent month by sector.

DOWNSIDE RISK

Though Powell described the labor market as being in balance because of supply and demand both declining simultaneously, he acknowledged this dynamic was "suggestive of downside risk."

The Trump administration's immigration crackdown has reduced labor supply, as has an acceleration of baby boomer retirements.

The reduction in immigration flows means the economy now needs to create roughly 100,000 jobs per month or less to keep up with growth in the working-age population, economists estimated. The decline in the unemployment rate to 4.1% in June was in part due to people dropping out of the labor force.

The increase in July still left the jobless rate in the narrow 4.0%-4.2% range that has prevailed since May 2024.

The case for a September rate cut could be reinforced by the BLS' preliminary payrolls benchmark revision next month, which is expected to project a sharp drop in the employment level from April 2024 through March this year.

The Quarterly Census of Employment and Wages data, derived from reports by employers to the state unemployment insurance programs, has indicated a much slower pace of job growth between April 2024 and December 2024 than payroll data has suggested.

A line chart that shows the U.S. unemployment rate by month

Are workers being underestimated?

The majority of U.S. professionals (58%) believe they have a wide range of skills that are being underutilized in their current roles, according to LinkedIn's latest Workforce Confidence survey.

This sense of untapped potential is especially strong in certain fields: Nearly two-thirds of workers in the administrative and support services industry (65%) say they're being underutilized, along with 63% of those in retail and 62% of those in transportation. Education and oil, gas, and mining follow, both at 60%.

Even though the numbers suggest a mismatch between what workers can do and what their jobs actually require of them, some workers still aren't confident in how to overcome this and get ahead. The survey also found that professionals in the retail and transportation industries were less likely than Americans across other industries to say they understand the skills they need to reach the next step in their careers.

The latest US jobs report was a major disappointment. In July, only 73,000 jobs were created, far below expectations. What makes this worse is the downward revisions: May was cut from 125,000 jobs to just 19,000, and June from 133,000 to only 14,000. Taken together, the US economy has added on average only 35,000 jobs per month over the last three months => the lowest pace since June 2020.

The unemployment rate tells a similar story. The unrounded jobless rate rose to 4.244%, its highest level since October 2021, just shy of the 4.3% mark.

This kind of sharp revision (-258k over two months) is rare, actually the first time since 1979, and usually signals a meaningful shift in the economy. While it may be too early to use the “R-word,” the hashtag#FederalReserve is now very likely to cut interest rates in September, most likely by 25 basis points. A 50-basis-point cut is also possible if the next jobs report or weekly unemployment claims worsen further by then.

One sector to watch closely is housing. If the hashtag#XHB ETF drops below its April lows despite falling long-term yields; the risk of a US recession would increase significantly.

July’s jobs report surprised many with just 73,000 jobs added, far below expectations—and market sentiment shifted fast as a result.

✅ Unemployment rate: 4.2% in July, up slightly from 4.1% in June.

🔍 Although the headline rate has hovered in a narrow band (4.0–4.2%) since May 2024, deeper data revisions cut 258,000 jobs from earlier estimates—suggesting the labor market may be softer than previously thought.

Here's what this tells us:
Jobs are slowing: Weak gains and sharp revisions to prior months are red flags, not reassurance.

The labor force is shrinking: Hourly participation and overall employment‑population ratios continue to dip—impacting the unemployment rate’s reliability.

Healthcare and social assistance remain the only sectors driving job growth—federal government and manufacturing continue to decline.

🧠 Why this matters—and why you should care:
If you’re a job seeker: Think strategically about where demand still exists—and be ready for slower hiring cycles.

If you're a leader or hiring manager: Be prepared for more careful budget planning and shifts in recruitment strategy.

For policymakers or economists: The question isn't just whether unemployment is stable—but why it’s stagnant, amid declining labor force participation.

Main Street's Hidden Challenges: How Trade, Inflation & Jobs Reports Are Shaping Your Wallet 📉

Don't let the headlines mask the real story on Main Street.

This week's PCE and Jobs reports reveal a powerful combination of economic forces quietly reshaping the financial lives of consumers nationwide.

Persistent inflation, exacerbated by tariffs and trade policies, continues to erode purchasing power. At the same time, the significant slowdown in job growth and rising unemployment create growing anxiety about income stability and future security.

As trade and tariff news is delivered, what is the data saying?

July jobs report:

Nonfarm payroll +73K  vs. +100K est

Two-month revision -258,000…that is a big one.

Unemployment:

A little over 7 million Americans are unemployed.

The 4.2% is an increase from the June number of 4.1%

These numbers give all sides evidence for or against rate cuts.

DOGE effort and government job cuts are a reason for the 73K vs 100K

Will the inflation data have significant revisions?

The Fed has a dual mandate, full employment and price stability, and both are wavering.

Rate cut odds are up.

Inflation Remains Elevated Target: The PCE price index increased 2.6% year-over-year in June, exceeding the Federal Reserve's (Fed) 2% target.

Core PCE Higher than Expected: The core PCE index, excluding food and energy, rose 2.8% annually, surpassing forecasts and remaining elevated.

Tariffs Impacting Prices: Economists attribute some of the inflation to the pass-through of tariffs on goods to consumers,

How solid is this data?

Elevated Inflation: The PCE report indicates that inflation remains above the Federal Reserve's target, with tariffs contributing to higher prices on goods. Consumers are feeling this pinch in their everyday spending.

Weakening Job Security & Income: The latest Jobs report shows a notable slowdown in job growth and an increase in unemployment. This creates uncertainty about job security and potentially slower wage growth, further impacting consumers' ability to manage expenses.

These economic pressures are leading to tangible changes in consumer behavior on Main Street:

Cutting Back on Non-Essentials: Higher prices and concerns about income are driving consumers to reduce spending on discretionary items like clothing, entertainment, and dining out.

Seeking Value: Consumers are prioritizing value, opting for more affordable products and services, says CSUN Newsroom. This might involve switching to store brands at grocery stores or seeking out discounts.

Increased Caution: The mixed economic signals are making consumers more cautious about spending, especially on big-ticket items.

Is Powell and the FOMC too late? Or is waiting and see the proper positioning?