Key facts
- U.S. employers added 73,000 jobs in July, a sharp slowdown.
- The unemployment rate increased to 4.2%.
- Job gains for May and June were revised downward by a combined 258,000.
- Economists cite trade policy uncertainty as a drag on hiring.
- The labor force has shrunk, with retirements and reduced immigration cited as factors.
The U.S. labor market showed a significant slowdown in July, adding only 73,000 jobs, a figure substantially weaker than anticipated. The Bureau of Labor Statistics also released downward revisions for previous months, with May and June job gains slashed by a combined 258,000. May's estimate was reduced by 125,000 to 19,000, and June's preliminary tally was cut by 133,000 to 14,000.
Economists described the report as the worst major economic data since the end of the pandemic era, with some attributing the weakness to President Donald Trump's trade policies and the resulting uncertainty. Gregory Daco, chief economist at EY-Parthenon, stated that tariffs and uncertainty are paralyzing employers, while Joe Brusuelas, chief economist at RSM US, noted that trade and immigration policies are hurting hiring demand.
The unemployment rate edged up to 4.2% from 4.1%. The labor force also declined by 720,000 workers between May and June, attributed to factors such as Baby Boomer retirements and reduced immigration. Inflation ticking back up is also seen as slowing momentum in the labor market.
Despite the weaker headline numbers, some analysts maintain a more balanced view. Amy Glaser, senior vice president at Adecco, noted that while hiring has slowed, the labor market remains fundamentally strong with hiring across industries. However, Laura Ullrich, director of economics for the Indeed Hiring Lab, characterized the market as 'slack,' with low inflows and outflows, which is reassuring for those employed but challenging for job seekers.