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. July’s employment number is the lowest of 2025.
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. With the revisions, the figures show that the private sector added only 3,000 jobs in June.
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 cut 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 is 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.”
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 policy makers 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.
Arkansas officials reveal new details about Devil’s Den murders of husband and wife
Autistic researcher finds new path as DEI programs face cuts
Neha Ruch talks embracing motherhood without losing ambition
