Employers across the U.S. added 73,000 jobs in July, a slowdown from previous months and a sign the labor market is downshifting.
The numbers
Hiring was weaker than expected by economists, who had forecast payroll gains of 115,000 jobs last month, according to a poll by FactSet.
The unemployment rate rose to 4.2%, up from 4.1% in June.
The Labor Department also sharply revised job growth for May and June down by a combined 258,000, a sign that hiring earlier this year was weaker than previously estimated.
Factoring in the downward revisions, the three-month average employment gain from May to June was 35,000, compared to an average of 123,000 from January to April.
“Sadly, employment appears set for a further summer slowdown as firms, facing renewed cost volatility from escalating trade tensions, remain focused on managing labor costs through reduced hiring, performance-based layoffs, restrained wage growth and lower entry-level wages,” Gregory Daco, chief economist at consulting firm EY-Parthenon, said in a report. “We anticipate job creation will weaken further, remaining below trend in the coming months, with the unemployment rate likely rising toward 4.8% by early 2026.”
The health care sector saw the biggest gains in July, adding 55,000 jobs. The federal workforce continues to shed jobs, with 12,000 cuts in July.
What it means
Some market analysts said the subpar job growth in July suggests that stepped-up U.S. tariffs on the country’s economic partners are weighing on the labor market. President Trump issued an executive order late Thursday that imposes tariffs on dozens of U.S. trading partners.
“Today’s Jobs report is unambiguously soft and a reflection of the trade and tariff impact on economic growth,” said Art Hogan, chief market strategist at B. Riley Wealth. “Both the actual report and the big negative revisions are more evidence that the trade policy will slow growth.”
Beyond the ups and down of the job market, meanwhile, many Americans are struggling in an economy bifurcated between rich and poor.
“The top part of the income spectrum is doing incredibly well,” Beth Hammack, president and CEO of the Federal Reserve Bank of Cleveland, told CBS News’ Kelly O’Grady in an interview. “At the bottom end of the spectrum, what I hear when I’m out in the district is I hear a lot of struggle. I hear individuals trading down, they go to the supermarket and they can’t buy ground beef. They’re buying hot dogs.”
The latest job numbers could spur Federal Reserve officials to cut interest rates at their next meeting in September, according to economists. The central bank opted this week to hold its benchmark rate steady. President Trump has pushed for a rate cut, but Fed Chair Jerome Powell said that policymakers remain cautious about lowering rates until the impact of tariffs on the economy is clear.
“With this morning’s payroll miss — and the downward revisions that came with it — the Fed will again need to balance a slowing job market with inflation which isn’t slowing fast enough,” Chris Zaccarelli, chief investment officer for Northlight Asset Management, said in an email.
According to CME FedWatch, investors see a roughly 77% probability of a Fed cut at the Fed’s Sept. 16-17 meeting.
