Jobs Shocker: July Payrolls Far Below Estimates, Follow Massive Revisions Lower

The July jobs report revealed significantly weaker job growth than anticipated, with only 73,000 jobs added, falling short of the 104,000 estimate. This was exacerbated by massive downward revisions to May and June job numbers, totaling a reduction of 258,000 jobs. These revisions were so substantial they overshadowed previous smaller adjustments made during the Biden administration. Experts suggest these disappointing figures increase the likelihood of a Federal Reserve interest rate cut in September. The report also indicated a rise in the unemployment rate from 4.1% to 4.2%, a key metric the Federal Reserve is closely monitoring. The labor force participation rate saw a slight decline, reaching its lowest point since November 2022. Hourly earnings increased by 0.3% in July, bringing the year-over-year increase to 3.9%, which was above expectations. The average workweek for private nonfarm payroll employees edged up slightly to 34.3 hours. The number of people employed part-time for economic reasons remained largely unchanged. A significant shift was observed in the composition of the workforce, with a substantial increase in native-born workers and a sharp decrease in foreign-born workers. This report's weakness, particularly the large negative revisions, is being linked to the impact of trade and tariff policies on economic growth. The soft labor market data is seen as creating an "emergency" that could prompt the Fed to cut rates sooner rather than later.