The U.S. labor market weakened in July, adding only 73,000 jobs, far lower than expected, however the unemployment rate remained flat at 4.2%, according to the U.S. Bureau of Labor Statistics.
Job sectors that saw the most growth included health care and social assistance.
The federal government continued to lose jobs.
The number of unemployed people, at 7.2 million, was basically flat compared with June. The BLS notes that the unemployment rate has remained in a narrow range of 4.0% to 4.2% since May 2024.
The number of long-term unemployed – those jobless for 27 weeks or more – increased by 179,000 to 1.8 million.
The labor force participation rate, at 62.2%, changed little in July but has declined by 0.5 percentage point compared with July 2023.
The employment-population ratio, at 59.6%, was basically flat compared with June, but was down by 0.4 percentage point compared with a year ago.
Wages continued to increase slowly: The average hourly wage for all employees on private non-farm payrolls rose by 12 cents, or 0.3%, to $36.44. Over the past 12 months, average hourly earnings have increased by 3.9%.
Average hourly earnings of private-sector production and nonsupervisory employees rose by 8 cents, or 0.3%, to $31.34.
The BLS notes that it revised down its job gain estimates for May and June.
“July’s jobs data slumps well below consensus estimates, and the large downward revisions to data from May and June mean the labor market has cooled significantly,” says Sam Williamson, senior economist for First American. “The combination of slower hiring and the considerable downward revisions signals the labor market is teetering, which potentially sets up the Federal reserve to cut rates in September, barring a rebound in jobs data in August.”
“The weakening labor market could create a scenario where mortgage rates may soften, even before the Fed’s September meeting,” Williamson says. “Markets often move ahead of policy, and rising expectations of a cut could begin to lower long-term yields. That may lead to a modest decline in mortgage rates even before the Fed acts. Combined with rising housing supply and more stable home prices, lower rates could help ease affordability pressures and support a gradual recovery in housing activity later this year.”
In related news, President Trump earlier today fired BLS Commissioner Erika McEntarfer, claiming that the data presented in this month’s jobs report was “rigged” and implying that McEntarfer manipulated the numbers “for political purposes.”
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