The US job market showed signs of slowing in July, particularly affecting government and foreign workers. This trend may prompt the Federal Reserve to consider cutting interest rates in September.
According to a report released by the Labor Bureau, the growth in employment fell short of economists’ expectations, who had projected an increase of 100,000 jobs, as noted by the Wall Street Journal.
Data indicated that private sector employment rose by 85,000, while government jobs saw a decrease of 12,000.
Overall, the Bureau of Labor Statistics noted that only 73,000 jobs were added in July.
Since January, Trump’s administration has reportedly eliminated 84,000 positions.
Unemployment edged up slightly to 4.2% in July, which was also reflected in a separate Labor Bureau report.
Some statistics from the Federal Reserve Bank of St. Louis suggest that since President Trump took office again in January, he hasn’t differentiated between illegal and legal immigration.
In contrast, there’s been a notable rise of approximately 2.5 million for US-born workers during the same timeframe.
Employment figures for July showed continued growth in healthcare and social assistance, adding 55,000 and 18,000 jobs, respectively.
Average hourly earnings for non-farm payroll employees increased by 12 cents (0.3%) in July, reaching $36.44. Over the past year, wages rose by 3.9%, consistently outpacing the inflation rate, which stands at 2.4% now.
White House spokesperson Karoline Leavitt commented, “Inflation is easing, wages are increasing, unemployment remains stable, and the private sector is expanding.” She emphasized that Trump’s agenda prioritized job creation for American citizens over foreign nationals.
Revised data showed that employment in May and June was 258,000 jobs lower than initially reported.
The recent employment numbers suggest that the US economy may be accelerating faster than anticipated, as earlier data hinted.
Labor Secretary Lori Chavez Deremar pointed out that following a GDP growth forecast of 3% for the second quarter, the employment report offers more evidence that the public is experiencing genuine progress as the economy recovers from the previous administration’s policies.
However, the report also made significant changes to job gains from the past two months.
For instance, June’s jobs were adjusted down from 147,000 to just 14,000, marking the lowest figure in nearly five years. May’s total was revised to 125,000, showing a gain of only 19,000 jobs.
The BLS described these revisions as “larger than typical.”
In July, the number of long-term unemployed individuals—those without jobs for more than 27 weeks—rose significantly from 179,000 to 1.8 million.
Manpower Group’s North American president, Gel Doyle, mentioned, “The labor market isn’t in crisis, but the hiring momentum is certainly slowing, and some pressure is mounting.”
Participation rates in the workforce stayed relatively steady at 62.2%.
Doyle also noted that while employers are being cautious, they could be nearing a turning point thanks to positive indicators like consumer confidence and GDP growth.
As inflation pressures mount due to tariffs, the labor market appears to be softening. This has led experts on Wall Street to predict a greater likelihood of the Fed implementing rate cuts following last week’s policy adjustments.
Christopher Lapkey, chief economist at FWDBonds, stated, “The door to making a rate cut in September is wide open.” He added that although the labor market hasn’t collapsed, it is significantly weakened and could affect the overall U.S. economic outlook.
On Friday, Trump urged the Fed to take decisive action and expressed dissatisfaction with Chairman Jerome Powell’s reluctance to implement significant rate cuts.
Trump remarked in a Truth Social post that Powell needs to act effectively, or else the Fed Board will take control and make necessary adjustments.
Fed Governors Christopher Waller and Michelle Bowman recently voted against Powell’s cautious approach, marking a significant occurrence where multiple governors opposed the interest rate decision for the first time in three decades.
Both officials cautioned about potential economic risks while advocating for immediate rate cuts, suggesting that Trump’s tariffs might have a transient effect on inflation.
Bowman, who serves as vice-chair of banking supervision at the Fed, warned that delaying action could harm labor markets and slow economic growth further.
