US hiring slowed in July and revisions were down by a quarter million jobs for the prior two months, the first signs of the labor market impacts of business uncertainty over President Donald Trump's tariff, immigration and spending policies.
The US added 73,000 nonfarm jobs in July, the Bureau of Labor Statistics (BLS) reported Thursday, fewer than economists' expectations for about 110,000 jobs. Gains for the prior two months were revised lower by a combined 258,000 jobs, with June job growth adjusted to just 14,000, the lowest figure since December 2020.
Manufacturing lost 11,000 jobs, making for combined losses of 37,000 jobs in the last three months.
Following the release of the jobs numbers, fed funds futures showed a 69.2pc probability the Federal Reserve would cut its target rate by a quarter point at the next meeting in September, up from 37.7pc on Thursday. The Fed on Wednesday kept its rate unchanged for a fifth time this year, saying it will continue to monitor the impacts of the administration's policies before adjusting policy. That followed a report that same day showing stronger than expected 3pc GDP growth in the second quarter.
The US unemployment rate edged up to 4.2pc in July from 4.1pc in June and has remained in a range of 4-4.2pc since May 2024, BLS said.
"Tariff-driven price increases for goods likely will restrain real spending and trigger the further unwind of jobs created in the distribution sector earlier this year," Pantheon Macroeconomics said in a note after the report. "The adverse impact on business investment from the plunge in confidence in boardrooms this spring will emerge over coming months, weighing on labor demand."
Federal government jobs declined by 12,000 and have dropped by 84,000 since January, reflecting the impacts of Trump's efforts to cut the federal workforce, which are facing court challenges. Employees receiving severance pay or on paid leave are reported as employed.
Health care added 55,000 jobs while social assistance added 18,000. Retail trade added 15,700 jobs after losing 14,300 the prior month. Professional and business services lost 14,000 jobs.
Jobs were little changed in mining, quarrying, and oil and gas extraction, construction, wholesale trade, transportation and warehousing, leisure and hospitality, and other services.
Average hourly earnings were up on the year by 3.9pc in July, compared with 3.7pc in June.
