The U.S. economy added 73,000 jobs in July, the Department of Labor said Friday, and the unemployment rate ticked up to 4.2 percent. This was far short of expectations.
Economists had forecast employers would add 104,000 workers to payrolls and the unemployment rate would rise to 4.2 percent, with estimates ranging from zero to 140,000. Prior to the release of the official figures, however, many Wall Street traders were saying they believed the consensus estimate was too high.
In the prior month, employers were initially reported to have added 147,000 and the unemployment rate was reported to have dropped to 4.1 percent. Downward revisions reduced that figure to just 14,000.
“Too Little, Too Late. Jerome “Too Late” Powell is a disaster. DROP THE RATE! The good news is that Tariffs are bringing Billions of Dollars into the USA!” President Trump said on his Truth Social platform.
Private payrolls rose by 83,000. The services sector added 96,000 workers. Most of those jobs, however, were in healthcare and social assistance, so-called government-adjacent sectors. These added 73,000 jobs in July. The tech-heavy information sector shed 2,000 jobs. Wholesale trade contracted and retail trade expanded. The financial sector added 15,000 jobs. Professional and business services employment dropped by 15,000.
Leisure and hospitality, often a weather-vane sector for discretionary spending, rose by a mere 5,000, the second month in a row of weak hiring. Hiring in this sector may also be under pressure from the Trump administration’s crackdown on illegal immigration.
Manufacturing shed 11,000 workers, all within nondurable goods manufacturing, and mining employment fell by 2,000. Construction added just 2,000.
The federal government shed 12,000 jobs. State and local government employment also dipped.
Foreign born employment fell and native born employment rose, continuing the trend of the U.S. labor market rebalancing away from dependence on migrants at the expense of Americans. The number of foreign-born people in the labor force fell, likely reflecting the crackdown on illegal immigration.
There were extremely large revisions to the prior months, indicating that the earlier strength of the labor market was overestimated. The May estimate was revised down by 125,000 to just 19,000. The June estimate was revised down by 133,000 to 14,000. Combined, these revisions subtract 258,000 jobs from the earlier estimates.
Private payroll. growth in June was revised down from 74,000 jobs to a stagnant 3,000.
Despite the weakness of the jobs numbers and downward revisions, wages continue to rise. Average hourly earnings in the private sector rose by 12 cents, or
0.3 percent, to $36.44 in July. Over the past 12 months, average hourly earnings have increased by 3.9 percent. Average hourly earnings of blue collar workers rose by 8 cents, or 0.3 percent, to $31.34.
This week, the Federal Reserve announced that it was leaving its benchmark interest rate target range unchanged at 4.25 percent to 4.50 percent for the fifth consecutive meeting. In a rare display of division, two Fed governors voted against the decision, saying they would prefer to cut interest rates. President Trump has been critical of the Fed for keeping interest rates too high, nicknaming Fed chairman Jerome Powell “too late.”
At his press conference following the Fed meeting, Powell described the labor market as “solid” and said interest rates are “mildly restrictive.” He added that the main number to watch for the health of the labor market was likely the unemployment rate.
“The labor market’s solid, historically low unemployment. Financial conditions are accommodative, and the economy is not — the economy is not performing as though restrictive policy were holding it back inappropriately,” Powell said.
On Friday morning, prior to the release of the jobs report, President Donald Trump called on the board of the Fed to rise up against Powell.
“Jerome ‘Too Late’ Powell, a stubborn MORON, must substantially lower interest rates, NOW. IF HE CONTINUES TO REFUSE, THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!” Trump said on his Truth Social platform.
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