US Job Growth Fall Short of Expectations

The Labor Department announced on Friday that the US economy added 73,000 jobs in July, pushing the unemployment rate up to 4.2%. This outcome was significantly lower than what analysts had anticipated.

Economists had projected an addition of 104,000 jobs and a rise in the unemployment rate to 4.2%, with estimates ranging quite widely from zero to 140,000. Before the data was released, many traders on Wall Street seemed to think these expectations were a bit optimistic.

In the month prior, employers were reported to have added 147,000 jobs, with the unemployment rate dropping to 4.1%. However, that initial figure was revised down dramatically to just 14,000.

President Trump expressed his frustration on social media, stating, “Too little, too late. Jerome ‘too late’ Powell is a disaster. Please lower your rate! The good news is that tariffs are bringing billions into the US!”

Private sector jobs actually increased by 83,000, with the Services sector contributing 96,000 positions. Yet, many of these new jobs were in healthcare and social support, which might be considered more public sector roles. The tech industry saw a loss of 2,000 jobs, while wholesale trade and retail showed growth. The financial sector gained 15,000 jobs, but there was a decline of 15,000 positions in professional and business services.

Leisure and hospitality, often seen as a gauge for discretionary spending, managed to add only 5,000 jobs, marking a second consecutive month of weaker growth. This sector might be feeling additional pressure from the administration’s stricter immigration policies.

Manufacturing experienced a decline of 11,000 jobs, all within non-durable goods, while mining lost 2,000 jobs as well. Construction saw a minimal increase of just 2,000 positions.

Employment in the federal government decreased by 12,000, reflecting broader trends in state and local government jobs.

Interestingly, while foreign-born employment dipped, native-born employment rose. This aligns with a growing trend that seems to discourage reliance on immigration for job support. The decrease in foreign-born workers likely correlates with ongoing crackdowns on illegal immigration.

There have been significant revisions to previous months’ data, suggesting that the initial strength of the labor market had been overestimated. The May numbers were adjusted from 125,000 down to 19,000. June’s figures went from 133,000 to just 14,000. Altogether, these adjustments took away 258,000 jobs from earlier estimates.

The growth in private payroll for June was also revised from an increase of 74,000 down to a mere 3,000, which is quite stagnant.

Despite these disappointing employment figures and downward revisions overall, wages are still on the rise. The average hourly wage in the private sector rose by 12 cents to $36.44 in July, reflecting a 3.9% increase over the past year. Blue-collar workers saw their average hourly earnings rise by 8 cents to $31.34.

In a recent announcement, the Federal Reserve held its benchmark interest rate steady in a range between 4.25% and 4.50% for the fifth consecutive meeting. Notably, two Fed governors voiced their discontent with this decision, advocating for rate cuts. President Trump has been vocal about his criticism of the Fed for maintaining high rates, calling out Chairman Powell for acting “too late.”

At a press conference after the Fed meeting, Powell described the labor market as “solid” and mentioned that interest rates are currently “moderately restrictive.” He noted that unemployment remains a crucial indicator of labor market health.

“The labor market has a steady, historically low unemployment rate. While financial conditions are favorable, the economy isn’t quite functioning as intended under restrictive policies,” Powell commented.

Prior to the employment report’s release, President Trump urged the Fed board to take a stand against Powell. He remarked, “The stubborn idiot Jerome ‘too late’ Powell now must effectively cut interest rates. If he keeps resisting, the board needs to take charge and do what is necessary!”