U.S. Job Growth Hits the Brakes in July—Unemployment Creeps Up

Wall Street’s favorite economic indicator just got a reality check.

The jobs engine is sputtering

July’s payroll numbers came in lukewarm—no fireworks here. The unemployment rate? Inched up like a hesitant crypto trader during a bull run. Employers tapped the brakes hard enough to make even the Fed raise an eyebrow.

Labor market whiplash

Remember when every jobs report was breaking records? Those days are gone faster than a meme coin’s liquidity. Now we’re watching the slow-motion deflation of America’s jobs balloon—with all the grace of a centralized exchange during a flash crash.

The silver lining nobody wants

At least this gives Jerome Powell cover to keep playing with his favorite toy—the interest rate pause button. Because nothing says ‘stable economy’ like Wall Street betting against Main Street’s paychecks.

Funny how ‘soft landing’ talk always peaks right before the turbulence hits—almost like those ‘stablecoin’ promises before the depegging.

Key Takeaways

• U.S. employers added 73,000 jobs in July, down from the prior month and coming in lower than economists expected.
• The unemployment rate rose to 4.2%, while the number of jobs added in May and June were revised lower.
• The report comes as the Federal Reserve has said it was watching the labor market as it considers interest rate policy.

U.S. employers slowed their hiring in July, creating fewer jobs than economists expected, while the unemployment rate ticked higher. 

The July payroll report showed U.S. employers added 73,000 jobs in July, while the unemployment rate increased to 4.2%, according to data from the Bureau of Labor Statistics.

Economists surveyed by The Wall Street Journal and Dow Jones Newswire projected that the economy WOULD add 100,000 jobs in July. They anticipated that the unemployment rate would rise.

The bureau also revised prior reports, and May’s jobs gain now stand at 19,000, down from the originally reported 144,000, while the 147,000 reported for June shrank to 14,000. 

The jobs numbers come as the Federal Reserve is closely following the labor market as part of its “wait-and-see” approach on interest rates. Inflation has remained elevated, above the Fed’s target of 2%, and ticked higher in the closely-followed Personal Consumptions Expenditures index for July.  Fed officials have said that a strong labor market gives the central bank time to keep rates higher in order to fight inflation. 

The latest numbers indicate that the labor market is weaker than previously known, which is likely to put pressure on the Fed to cut interest rates. The central bank earlier this week decided to leave its key rate unchanged, with Fed Chair Jerome Powell saying officials need to see more data on how tariffs are affecting inflation before adjusting rates.

Job creation has slowed in recent months, with job openings declining in June. Employers have stayed in low-hiring, low-firing limbo as tariffs and high interest rates weigh on the economy.

Trump has pressured the Federal Reserve to lower interest rates, with two members voting to lower rates last week, citing weakness in the labor market.