The latest monthly jobs report showed that the US labor market added fewer jobs than expected in July, while the unemployment rate rose. A revision to previous months' figures also revealed that actual job growth was much smaller than initially reported.
The US economy added just 73,000 nonfarm payrolls (NFP) jobs in July, well below economists' expectations of 104,000. The unemployment rate rose to 4.2% from 4.1% the previous month, in line with market expectations.
In a statement, the Bureau of Labor Statistics (BLS) said the downward revisions to the May and June jobs reports were "larger than usual", with the new data showing more than 250,000 fewer jobs added during the period. May's job growth was revised down to just 19,000 from 144,000, while June's figure was cut to 14,000 from 147,000.
Average hourly earnings in July rose 3.9% from a year ago and 0.3% from the previous month, in line with expectations. However, the labor force participation rate fell to 62.2% from 62.3%. The data came just two days after the Federal Reserve left interest rates unchanged at its July meeting, with Chairman Jerome Powell calling the labor market “strong,” although acknowledging that job creation has slowed due to a labor shortage due to low immigration.
After the jobs report, the probability that the Federal Reserve will cut interest rates in September jumped to 67% from just 38% a day earlier, according to the CME FedWatch Tool. Capital Economics economists said the apparent loss of hiring momentum in the report would strengthen the case for a rate cut by the dovish FOMC.
Other data also pointed to a slowdown in the labor market. The ADP report showed private sector payrolls rose by 104,000 in July, better than expectations of 75,000 and rebounding from a 23,000 job loss in June. However, the overall momentum of private-sector hiring has clearly slowed in recent months.
In a separate report, the BLS said there were 7.44 million job openings at the end of June, down from 7.71 million the previous month. The hiring rate also slipped to 3.3% from 3.4% previously, the lowest level since November 2024.
