In July 2025, the U.S. economy added just 73,000 new jobs, signaling a significant slowdown in the labor market. This figure, reported by the Bureau of Labor Statistics, came in below the expected 100,000. While slightly better than June’s revised 14,000 job gain, it was still disappointing. Even more concerning were the downward revisions for previous months: May and June job totals were reduced by a combined 258,000.
The national unemployment rate rose to 4.2%, matching forecasts, but marking a clear uptick from earlier months. Moreover, a broader measure of unemployment, which includes discouraged and part-time workers, increased to 7.9%, the highest since March. Long-term unemployment worsened as well — the average unemployed person had been jobless for over 24 weeks.
Job growth in July was largely concentrated in a few sectors. The healthcare industry added 55,000 jobs, and social assistance services added 18,000. These two sectors alone made up nearly all of the job gains. Retail and finance added modest numbers, while the federal government continued to shrink, shedding another 12,000 jobs. The drop in federal employment reflects efforts to streamline the government, which began earlier this year.
The sluggish labor data is stirring debate over whether the Federal Reserve should lower interest rates. Market bets on a rate cut at the September meeting have risen sharply, especially given weakening momentum in hiring. Some believe the rising costs for businesses and ongoing uncertainty — such as the administration’s new tariffs — are causing companies to delay new hires.
Wages showed slight growth. Average hourly earnings rose by 0.3% in July, and by 3.9% over the past year, which was slightly better than expected.
Meanwhile, President Donald Trump has renewed pressure on the Fed to cut rates more aggressively, expressing his frustration on social media. Despite strong GDP growth of 3% in Q2, much of that came from inventory adjustments rather than strong underlying demand, suggesting the economy may not be as healthy as it seems on the surface.
Overall, July’s jobs report highlights growing cracks in the U.S. labor market. While not yet in crisis, the trend suggests a slowing economy that may need additional support in the months ahead.
