The US economy added just 73,000 jobs in July
The US job market slowed substantially in July and was much weaker than first estimated for prior months, suggesting President Donald Trump’s trade policy may be stifling hiring.
The US economy added just 73,000 jobs last month, and the monthly totals for May and June were revised down by a combined 258,000 jobs.
The prior two months’ revisions were “stunning,” said Diane Swonk, chief economist at KPMG, in an interview with CNN.
May’s estimated 144,000 net gain was revised down by 125,000 to 19,000; and June’s preliminary tally of 147,000 was slashed by 133,000 to 14,000, according to data released Friday from the Bureau of Labor Statistics.
“It’s stalling out right now,” Swonk said of the labor market.
With those monumental revisions, the meager job gains in June were the weakest since December 2020, the last time the labor market had monthly job losses. The pace of job creation seen so far this year is the weakest in decades, outside of recessions.
“This is absolutely the worst major economic report since the end of the pandemic era,” Joe Brusuelas, chief economist at RSM US, wrote to CNN via email.
The Dow opened lower, falling by more than 600 points, or 1.3%, by mid-morning. The broader S&P 500 fell 1.4% and the tech-heavy Nasdaq Composite slipped 1.8%. Traders now expect a 67% chance of a rate cut from the Federal Reserve in September, up from a 38% chance on Thursday, according to the CME FedWatch Tool.
Trump’s “unorthodox economic agenda and policies may be starting to make a dent in the labor market, and especially troubling was the massive downward revisions of over a quarter million jobs in May and June,” Christopher Rupkey, chief economist at FwdBonds, wrote in a note Friday.
The unemployment rate rose to 4.2% from 4.1%.
Tariffs are ‘paralyzing’ employers
High uncertainty over Trump’s economic policies — specifically a volatile trade policy and shifting tariff rates — have been blamed for putting a stranglehold on employers’ growth plans.
“Tariffs and uncertainty are paralyzing employers,” Gregory Daco, chief economist at EY-Parthenon, told CNN in an interview.
Economists were expecting the report to show a slowdown in job growth, reflecting the weak pace of hiring across the vast majority of industries.
Forecasts called for a gain of 115,000 jobs in July and the unemployment rate to rise to 4.2%.
However, economists weren’t expecting the past three months to be this weak.
“This (jobs report) is really bad because you can see the impact of trade and immigration policy hurting demand for hiring,” Brusuelas said.
In recent months, despite the labor market registering slower but solid gains, economists also were sounding some alarm bells: The all-important labor market churn was grinding to a halt, and a smaller and smaller subset of industries was responsible for the job gains.
That lack of breadth was wildly apparent in July: Health care and social assistance, which added 73,300 jobs, accounted for the entirety of the month’s gains.
“There was a three-legged stool holding up the labor market; we had state and local, leisure and hospitality, and health care and social assistance,” Swonk said. “And now we’re down to one.”
“A one-legged stool is dangerous,” she added.
Leisure and hospitality, which typically sees a summertime boom, added a meager 5,000 jobs in July. June’s gains were revised down to 4,000, BLS data shows.
“That’s almost within the margin of error,” Swonk said. “That reflects a slowdown in domestic travel and tourism.”
State and local government posted a meek 2,000-job net gain in July. And June’s initially reported 80,000-job gain — which economists warned was likely an “artificial” increase that resulted from seasonal adjustments — was revised down to 20,000 jobs.
This story is developing and will be updated.
CNN’s Matt Egan contributed to this report.