The U.S. economy added a smaller-than-expected number of new jobs last month as the labor market continues to cool.

In July, payroll growth slowed to 73,000, new Bureau of Labor Statistics data show.

The median estimate for employment gains was 115,000, according to FactSet Insights.

The unemployment rate ticked up to 4.2 percent from 4.1 percent, in line with market expectations.

Private payrolls rebounded in July, soaring by 83,000 following a downwardly revised 3,000 boost in June.

Health care and social assistance accounted for all the employment gains, with 55,000 and 18,000 new jobs, respectively.

Federal government jobs fell by 12,000 and are down by 84,000 this year.

“Employees on paid leave or receiving ongoing severance pay are counted as employed in the establishment survey,” the report stated.

Manufacturing payrolls also declined by 11,000.

Workers are still commanding higher pay. Average hourly wage growth rose by 0.3 percent monthly and edged up to a higher-than-expected 3.9 percent year over year.

The labor force participation rate dipped to 62.2 percent from 62.3 percent, and average weekly hours rose to 34.3 from 34.2.

Revisions were a major component of the July jobs numbers.

According to the Bureau of Labor Statistics, June’s reading was revised lower by 133,000 to 14,000. Payroll employment for May was also adjusted lower by 125,000 to 19,000. In total, employment was lower by 258,000 than initially reported. Since February, revisions have totaled more than 300,000.

Ernie Tedeschi, director of economics at The Yale Budget Lab and former chief economist on the White House Council of Economic Advisers, says this was the largest two-month revision since at least 1979, outside of the pandemic.

The trend of workers finding it more challenging to obtain employment persisted last month. The number of long-term unemployed surged by 179,000 to 1.8 million, accounting for nearly 25 percent of all jobless individuals.

The number of full-time workers employed fell by 440,000, while the number of part-time workers employed increased by 247,000.

Additionally, the number of people working two or more jobs dropped by 523,000 to 8.34 million.

Meanwhile, the household portion of the monthly jobs report, which removes duplication, showed employment fell by 260,000.

Market Reaction

U.S. stocks remained in the red following the July jobs report, with the leading benchmark averages down by about 1 percent.

Investors reacted negatively to President Donald Trump’s new tariffs at the August 1 deadline. The president issued updated levies ranging from 10 percent to 41 percent, and transshipped goods will be subject to another 40 percent tariff. Trump also raised the tariff on goods imported from Canada to 35 percent from the previous rate of 25 percent.

Yields for U.S. Treasury securities were firmly in the red. The benchmark 10-year yield fell by about eight basis points to below 4.28 percent. The two-year yield erased more than 16 basis points to 3.79 percent, while the 30-year shed four basis points to 4.85 percent.

The U.S. dollar index, a measure of the greenback against a weighted basket of currencies, dropped by almost 0.8 percent after the July jobs report, snapping its momentum. The index remains on track for a weekly gain of approximately 1.5 percent.

The Federal Reserve’s dual mandate—price stability and maximum employment—is back in focus after the worse-than-expected July jobs report, says Chris Zaccarelli, CIO for Northlight Asset Management.

“With this morning’s payroll miss—and the downward revisions that came with it—the Fed will again need to balance a slowing job market with inflation which isn’t slowing fast enough,” Zaccarelli said in a note emailed to The Epoch Times.

This week, the Fed left interest rates unchanged for the fifth consecutive meeting, maintaining a target range of 4.25 percent to 4.5 percent. The meeting ended with two dissents—those of Fed Governor Christopher Waller and Fed Vice Chair for Supervision Michelle Bowman—for the first time in 30 years.

The two key monetary policymakers defended their actions, pointing to upside risks to the labor market.

“With tariff-related price increases likely representing a one-time effect, it is appropriate to look through temporarily elevated inflation readings,” Bowman said in an Aug. 1 statement.

“I see the risk that a delay in taking action could result in a deterioration in the labor market and a further slowing in economic growth.”

Citing the lag effect of monetary policy, Waller noted that the Fed needs to act quickly to prevent a further deterioration in employment.

“With underlying inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate,” Waller said in an Aug. 1 statement.

“When labor markets turn, they often turn fast.”

The July jobs data should send the message that economic conditions are changing, according to Charlie Ripley, senior investment strategist for Allianz Investment Management.

“Overall, today’s data signals labor market conditions continue to cool, and while the softer conditions don’t warrant a warning signal for investors, it should put market participants including the Fed on notice that economic conditions are shifting,” Ripley said in a note emailed to The Epoch Times.

Data Dump

Leading into the July jobs report, a treasure trove of data relating to the U.S. labor market was released.

The Bureau of Labor Statistics released the Job Openings and Turnover Summary for June. The number of job vacancies decreased to a smaller-than-expected 7.43 million, lower than the 7.71 million recorded in May.

Job quits—a measure economists use to determine workers’ confidence in finding a new job in today’s economy—also fell by more than 100,000 to 3.14 million.

Payroll processor ADP highlighted a rebound in private-sector hiring.

According to the July National Employment Report, private payrolls swelled by 104,000, up from a downwardly adjusted 23,000 decline in June, and above economists’ expectations.

“Our hiring and pay data are broadly indicative of a healthy economy. Employers have grown more optimistic that consumers, the backbone of the economy, will remain resilient,” Nela Richardson, chief economist at ADP, said in a statement.

Planned job cuts surged last month, fueled by actions related to the Department of Government Efficiency (DOGE), artificial intelligence (AI), and tariff fears.

Global outplacement firm Challenger, Gray, and Christmas found planned layoffs increased by 62,075 in July, up from the 47,999 announced in June. This was up 140 percent from the same time a year ago and above average for the month since the pandemic.

“We are seeing the Federal budget cuts implemented by DOGE impact non-profits and healthcare in addition to the government. AI was cited for over 10,000 cuts last month, and tariff concerns have impacted nearly 6,000 jobs this year,” said Andrew Challenger, the firm’s senior vice president.

At the same time, weekly claims figures indicate that businesses are not laying off workers en masse.

For the week ending July 26, initial jobless claims—a gauge of the number of individuals filing applications for new unemployment benefits—ticked up to 218,000 from 217,000 in the previous week. This came in below economists’ expectations and hovered near a three-month low.