While we may be in the middle of summer, the labor market is experiencing a cold front.

Employers added fewer jobs than expected in July, according to the latest jobs data from the Bureau of Labor Statistics. Meanwhile, a significant downward revision to the May and June data suggested actual job gains were much lower than the robust numbers originally reported.

July’s weak numbers and the revisions for May and June surprised economists and prompted President Trump to order the firing of BLS commissioner Erika McEntarfer, claiming via his social media platform that the numbers were “manipulated for political purposes.”

The newest employment data suggests that employers, faced with a myriad of economic challenges—including uncertainty over President Trump’s tariff threats, the administration’s immigration crackdown hurting the labor supply, and high interest rates—are opting to hunker down instead of investing in growing their businesses and expanding their workforce.

“There’s generally this cautiousness,” Rajesh Namboothiry, SVP at Manpower US, told HR Brew. “They’re just watching how this will play out over the next six months.”

Diving into the data. Employers added just 73,000 jobs in July, falling short of the Dow Jones’ estimate of 100,000. The BLS also reported steeper than usual revisions for May and June. Employers added just 19,000 jobs in May, and 14,000 in June, around 258,000 less than originally reported.

“With downward revisions anticipated in September’s benchmark revision, a major reassessment of the labor market’s health is likely. However, it has been evident throughout the year that the labor market lacks momentum,” Kory Kantenga, head of economics for the Americas at LinkedIn, wrote on the platform.

The unemployment rate rose slightly to 4.2% in July, but continued to hover between the range of 4% and 4.2% from May 2024. Meanwhile, average hourly earnings for employees rose by 12 cents to $36.44, a 0.3% increase.

Healthcare added more than 55,000 jobs, beating its own 12-month average monthly gains of 42,000, with growth largely driven by ambulatory healthcare services and hospitals. Meanwhile, social assistance saw the second-highest job gains, adding 18,000 in July, with the bulk of hiring in individual and family services.

Healthcare and social assistance were among the few sectors with strong job growth, said Namboothiry. “Every other sector is actually pulling back. So this is an indication of employers saying we’re going to just wait and watch. We’re not going to hire at this point.”

Employment in the federal government declined by 12,000 jobs in July, falling 84,000 since its peak in January. Professional and business services saw 14,000 fewer jobs added, the largest drop of any sector, driven by losses in administrative and support services, while manufacturing and nondurable goods both reported job losses of 11,000.

‍

Read full article here