Jobs Growth Cools And Prior Months Revised Lower
U.S. employers added 73,000 jobs in July, a sharp slowdown that undercut expectations and signaled a cooler labor market. Just as notable, the Labor Department’s revisions wiped out a combined 258,000 jobs previously reported for May and June, recasting the summer hiring picture as much weaker than believed. The unemployment rate rose to 4.2% from 4.1% in June. Economists had looked for roughly 100,000–110,000 new jobs, but the underwhelming print—paired with the big downward revisions—points to a softer trend.Sector Gains Narrow While Losses Broaden
Hiring was highly concentrated. Health care accounted for the bulk of gains, adding about 55,400 positions, while many cyclical and white-collar categories slipped. Manufacturing shed roughly 11,000 jobs, marking another monthly decline, and federal government payrolls fell by about 12,000. Administrative and support roles dropped by nearly 20,000, underscoring cooling demand for business services. A separate revision slashed June’s earlier estimate of state and local education hiring from about 64,000 to under 10,000, revealing that public-sector strength was overstated. The result is a narrower base of job creation that relies heavily on health-related hiring while other sectors either stagnate or contract.
Markets React And Fed Pressure Builds
Financial markets quickly priced in a weaker growth path. Stock futures slid after the report, Treasury yields fell, and the U.S. dollar weakened as traders increased bets that the Federal Reserve will cut interest rates at its September meeting. Average hourly earnings rose 0.3% month-over-month, in line with forecasts, but investors focused on the cooler hiring pulse and the large revisions to previous months. Earlier this week, the Fed left rates unchanged for a fifth straight meeting, emphasizing patience as it assessed the labor market and inflation—an assessment that now looks more fragile after July’s data.
What The Data Suggests For The Economy
Taken together, the July report and revisions indicate a labor market that is downshifting from the brisk pace of 2021–2023. The rise in unemployment to 4.2% and the narrow sectoral gains suggest hiring momentum is becoming harder to sustain amid higher borrowing costs and policy uncertainty. Some analysts argue that slower payroll growth can still be consistent with stabilization as labor-force growth cools. Yet other signals—declines in manufacturing and business-services jobs and the step-down in public-education hiring—point to broader cooling that could intensify if demand softens further. The proportion of workers quitting for better opportunities has eased from pandemic-era highs, another sign that worker leverage is waning. With markets now leaning toward a September rate cut, the next few data points—especially August payrolls and inflation prints—will be critical in determining whether the slowdown remains orderly or deepens into a more pronounced downturn.