Jobs Up by 73,000 in July Amid May, June Revisions; Industry Economists Weigh In
(Image courtesy of BLS)
Total nonfarm payroll employment increased by 73,000 in July and the unemployment rate stood at 4.2%, the U.S. Bureau of Labor Statistics reported Aug. 1.
Employment increased in health care and social assistance, and the federal government continued to see job losses.
Revisions for May and June were larger than normal, the BLS reported. The change in total nonfarm payroll employment for May was revised down by 125,000, from 144,000 to 19,000. For June, it was revised down by 133,000 from 147,000 to 14,000.
With both those revisions, employment in May and June was 258,000 lower than originally reported.
“This morning’s release showed significant labor market weakening over the past three months, as indicated by job growth down to a gain of 73,000 jobs in July and significant downward revisions to the totals for May and June. Notably, goods-producing industries saw contraction for the third straight month,” said MBA Vice President and Deputy Chief Economist Joel Kan. “Service industries involved in trade also saw declines in job growth, potentially a result of the uncertain tariff environment, as businesses either put their activity on pause or pulled back altogether.”
Kan weighed in on how this will affect interest rates and the economy generally. “The outlook for inflation and employment remains fragile, and MBA’s forecast is for the unemployment rate to increase to over 4.5% by the end of the year, peaking at around 4.8% in early 2026, as the economy continues to slow,” he said. “We expect that this labor marketing softening will prompt the Fed to cut rates twice this year and once in 2026.”
“The combination of slower hiring and the considerable downward revisions signals the labor market is teetering, which potentially sets up the Federal reserve to cut rates in September, barring a rebound in jobs data in August,” noted First American Senior Economist Sam Williamson.
“The weakening labor market could create a scenario where mortgage rates may soften, even before the Fed’s September meeting. Markets often move ahead of policy, and rising expectations of a cut could begin to lower long-term yields,” Williamson continued. “That may lead to a modest decline in mortgage rates even before the Fed acts. Combined with rising housing supply and more stable home prices, lower rates could help ease affordability pressures and support a gradual recovery in housing activity later this year.”
