US Job Growth Slows July Unemployment Rises 4.2%

The U.S. labor market showed signs of slowing in July 2025, with total nonfarm payroll growth reaching only 73,000, significantly below expectations and following downward revisions of 258,000 jobs for May and June combined. The unemployment rate increased slightly to 4.2%, reflecting a modest rise from prior months. Healthcare and social assistance sectors contributed most of the job gains, while professional services, manufacturing, and the federal government experienced notable job losses. Average hourly earnings increased moderately by 0.3% for the month and 3.9% year-over-year, maintaining steady wage growth amid slowing hiring. These developments have sparked speculation that the Federal Reserve may consider lowering interest rates at its September meeting to respond to the cooling labor market. Despite the slowdown, economists describe the labor market as moderating rather than deteriorating, with ongoing political and economic uncertainties influencing hiring decisions.