U.S. Job Growth Slows in July as Unemployment Rises

U.S. job growth slowed in July, with nonfarm payrolls rising by 73,000, according to government data released Friday. This figure was below the Dow Jones consensus estimate of 100,000 and followed a significant downward revision of job gains for May and June, which were reduced by a combined 258,000 positions. The unemployment rate increased to 4.2%, matching forecasts.

The July report showed that most job gains were concentrated in the health care sector, which added 55,000 positions, and in social assistance, which contributed 18,000 jobs. Federal government employment continued to decline, falling by 12,000 in July and by 84,000 since January, following efforts by the Department of Government Efficiency to reduce the workforce.

Average hourly earnings rose by 0.3% for the month, in line with expectations, while the annual increase reached 3.9%. Stock market futures and Treasury yields fell after the release of the report. Heather Long, chief economist at Navy Federal Credit Union, described the report as a significant shift, stating, "The labor market is deteriorating quickly." Ger Doyle, North America regional president at Manpower Group, said the data "adds weight to signs of a slow but persistent cooling trend," noting that while the market is not in crisis, hiring momentum is softening.

Following the report, futures traders increased the probability of a Federal Reserve interest rate cut at its September meeting to 63%, up from 40% the previous day.