US job market stalled
By Paul Wiseman & Josh Boak Associated Press
Washington (AP) — The U.S. job market stalled unexpectedly last month, delivering a political blow to President Donald Trump three months ahead of midterm elections and complicating decision-making for the inflation fighters at the Federal Reserve.
Employers cut 23,000 jobs in July. And Labor Department revisions slashed 103,000 jobs from May and June payrolls.
The unemployment rate fell but for the wrong reason: Thousands of people dropped out of the labor market so fewer people were competing for work.
The July jobs numbers from the Labor Department Friday marked a sharp setback for the American labor market and for Trump less than three months before his Republican party seeks to keep full control of Congress in the midterm election.
Forecasters had expected job creation to approach 100,000 last month.
Local public schools cut 50,000 jobs in July, restaurants and bars 26,000, retailers 19,000.
The 4.1% unemployment rate was the lowest since June 2025 – but it only fell because 264,000 people dropped out of the labor market last month. The share of those working or looking for work fell to 61.4%, the lowest since February 2021.
US job market stalled
“We can’t really put lipstick on a pig here,” said Daniel Zhao, chief economist at the jobs website Glassdoor. ”This is not a great report for July.”
Manufacturing up, but public schools down
The Trump administration, which has imposed massive tariffs in an attempt to protect American industry and create manufacturing jobs, noted that jobs were up 22,000 at construction companies and 5,000 at factories.
“The Trump industrial resurgence is on schedule,” said White House spokesman Kush Desai. “Manufacturing and factory construction jobs grew again in July even as government payrolls continued to significantly shrink.’’
Trump has long bragged that jobs have been increasing for native-born citizens in his economy, but that talking point was undermined by the July numbers. The White House declined to comment on why Friday’s report showed that employment for native-born Americans dropped by 720,000 over the past 12 months. Those numbers can be quirky. They’re not adjusted for seasonal changes and are not seen as a reliable measure of total native-born employment. But the administration had latched onto them as evidence that Trump’s immigration crackdown was benefiting people born in the United States.
To raise or not to raise
US job market stalled
Policymakers at the Federal Reserve have been divided over whether to start raising interest to combat inflation that has exceeded their 2% target for more than five years. The Fed kept rates unchanged at its meeting last week — but three officials dissented from that decision in favor of a rate hike. Wall Street traders were expecting rate hikes later this year. Friday’s report may at least delay higher rates.
“The Fed has to consider the health of the job market as they debate whether a hike is justified,″ said Glassdoor’s Zhao. ”The softness in today’s report is going to have to give the Fed a little bit of pause.″
July wage gains were modest. Average hourly pay was up 3.2% last month from July 2025, the smallest year-over-year increase since May 2021. The smaller wage gains are coming at a time when American families are squeezed by the high cost of living.
“This is a bleak jobs report,” said Heather Long, chief economist at Navy Federal Credit Union. “The U.S. labor market is stalling again and that is going to make the Federal Reserve’s job harder and life for job seekers rough.”
Women lost 32,000 jobs last month, the Labor Department reports, accounting for all the job losses in July. But that marked a reversal in women’s fortunes: They still gained 321,000 jobs over the past 12 months; men lost 5,000 over that period.
Economists noted that private payrolls continued to grow in July and that the big drop in public school payrolls might have been a statistical glitch caused by seasonal adjustments.
Rebounding from a miserable 2025
US job market stalled
Hiring had rebounded this year from a lackluster 2025 in the face of the conflict in the Persian Gulf that has sent energy prices surging and put a strain on family budgets. Job growth had been solid, if unspectacular. Some businesses are having trouble filling vacancies. Others are using technology to do the work humans used to do.
Americans who have jobs are enjoying unusual job security. Layoffs are low by historical standards. Companies, scarred by the surprise labor shortages that followed COVID-19 lockdowns a few years ago, don’t want to risk giving up the staff they have.
One week in July the number of Americans filing for unemployment benefits dropped to the lowest level in more than 50 years. The jobless rate tumbled to 4.2% in June, the lowest in a year, and is expected to have stayed there last month, according to a survey of forecasters by the data firm FactSet.
But Americans who have lost their jobs – or are seeking to bust into the job market for the first time – are struggling to catch a break.
Economists have used the term “no hire, no fire” to describe the unusual job market conditions.
Hiring in the year to date remains weak
So far this year, employers are adding 61,000 jobs a month, up from 9,700 in 2025, the weakest hiring outside a recession since 2002. But job creation this year is well below the 2023-2024 average of 166,000 jobs a month — and it had been even higher during the 2021-2022 hiring boom that followed the end of COVID-19 lockdowns.
US job market stalled
At least the United States doesn’t need as many jobs as it used to to keep the unemployment rate from rising. Trump’s immigration crackdown and the ongoing retirement of baby boomers mean fewer people are competing for work. So the “break-even’’ rate of monthly hiring, 155,000 in 2023-2024, has dropped, perhaps to nearly zero, according to a Federal Reserve study.
The jobs outlook is clouded by the ongoing fighting in the Persian Gulf, which has pushed up energy prices and squeezed family budgets, and by the rise of artificial intelligence, which could either make workers more efficient and better-paid — or take their jobs.
In a report out this week, researchers Ingrid Chen, Marianna Kudlyak and Riva Mikhlin of the Federal Reserve Bank of San Francisco found that landing a job has gotten tougher in the past couple of years – surprisingly so.
Normally, this deep into an economic expansion – it’s been more than six years since the last recession – employers would need workers so badly that they’d be taking chances on young people and on those with less education. Not this time. “Instead of being pulled in, the pipeline into employment is shrinking such that the recovery is no longer reaching workers at the margins,’’ Chen, Kudlyak and Mikhlin write.
Moreover, the unemployed people who normally get back to work the fastest – those in their prime working years (25 to 54) and with college educations – are struggling to find new jobs. The San Francisco Fed researchers aren’t sure what’s making the job search so tough. They suspect it might have to do with the immigration crackdown, hiring slowdowns specifically at tech companies and government contractors, uncertainty over the direction of government policy or “early signals of broader labor market deterioration.’’
AP Business Writer Claire Savage in Chicago contributed to this story.
Both nonfarm payroll employment (-23,000) and the unemployment rate (4.1 percent) changed little in
July, the U.S. Bureau of Labor Statistics reported today. Employment declined in local government
education and retail trade. Employment continued to trend up in health care.
This news release presents statistics from two monthly surveys. The household survey measures labor
force status, including unemployment, by demographic characteristics. The establishment survey
measures nonfarm employment, hours, and earnings by industry. For more information about the
concepts and statistical methodology used in these two surveys, see the Technical Note.
Household Survey Data
Both the unemployment rate, at 4.1 percent, and the number of unemployed people, at 6.9 million,
changed little in July. These measures also changed little over the year. (See table A-1.)
Among the major worker groups, the unemployment rates for teenagers (12.1 percent) and people who
are Hispanic (4.6 percent) declined in July. The jobless rates for adult men (3.9 percent), adult
women (3.7 percent), and people who are White (3.6 percent), Black (6.3 percent), or Asian (4.0
percent) showed little or no change over the month. (See tables A-1, A-2, and A-3.)
Among the unemployed, the number of people on temporary layoff increased by 153,000 to 921,000 in
July. The number of permanent job losers changed little at 1.7 million. (See table A-11.)
In July, the number of people jobless less than 5 weeks edged down to 2.0 million and is down by
344,000 over the year. The number of long-term unemployed (those jobless for 27 weeks or more)
edged down over the month to 1.8 million but changed little over the year. The long-term unemployed
accounted for 25.5 percent of all unemployed people in July. (See table A-12.)
Both the labor force participation rate, at 61.4 percent, and the employment-population ratio, at
58.9 percent, changed little in July. Since January, the labor force participation rate declined by
0.7 percentage point, and the employment-population ratio decreased by 0.5 percentage point.
(See table A-1.)
The number of people employed part time for economic reasons changed little at 4.8 million in July.
These individuals would have preferred full-time employment but were working part time because their
hours had been reduced or they were unable to find full-time jobs. (See table A-8.)
In July, the number of people not in the labor force who currently want a job changed little at 5.9
million. These individuals were not counted as unemployed because they were not actively looking for
work during the 4 weeks preceding the survey or were unavailable to take a job. (See table A-1.)
Among those not in the labor force who wanted a job, the number of people marginally attached to
the labor force changed little at 1.8 million in July. These individuals wanted and were available
for work and had looked for a job sometime in the prior 12 months but had not looked for work in
the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally
attached who believed that no jobs were available for them, was essentially unchanged in July at
476,000. (See Summary table A.)
Establishment Survey Data
Total nonfarm payroll employment changed little in July (-23,000), following an average monthly
gain of 34,000 over the prior 12 months. In July, employment declined in local government education
and retail trade. Employment continued to trend up in health care. (See table B-1.)
Employment in local government education declined by 50,000 in July, after showing little net
change over the prior 12 months.
Retail trade lost 19,000 jobs in July. Employment declined in warehouse clubs, supercenters, and
other general merchandise retailers (-21,000) and in gasoline stations and fuel dealers (-5,000).
Sporting goods, hobby, musical instrument, book, and miscellaneous retailers added 10,000 jobs.
Retail trade employment had shown little net change over the prior 12 months.
Employment in financial activities continued to trend down in July (-14,000), reflecting losses in
credit intermediation and related activities (-9,000) and insurance carriers and related activities
(-7,000). Financial activities employment is down by 121,000 since a recent peak in May 2025.
In July, employment in health care continued its upward trend (+22,000) but at a slower pace than
the average monthly gain over the prior 12 months (+36,000). Employment in ambulatory health care
services continued to trend up over the month (+18,000).
Employment showed little change over the month in other major industries, including mining,
quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; transportation
and warehousing; information; professional and business services; social assistance; leisure and
hospitality; and other services.
In July, average hourly earnings for all employees on private nonfarm payrolls, at $37.62, were
little changed (+2 cents). Over the year, average hourly earnings have increased by 3.2 percent. In
July, average hourly earnings of private-sector production and nonsupervisory employees, at $32.40,
were little changed (+4 cents). (See tables B-3 and B-8.)
The average workweek for all employees on private nonfarm payrolls was unchanged at 34.3 hours in
July. In manufacturing, the average workweek was also unchanged at 40.4 hours, and overtime edged
down by 0.1 hour to 3.1 hours. The average workweek for production and nonsupervisory employees on
private nonfarm payrolls remained at 33.8 hours. (See tables B-2 and B-7.)
The change in total nonfarm payroll employment for May was revised down by 66,000, from +129,000 to
+63,000, and the change for June was revised down by 37,000, from +57,000 to +20,000. With these
revisions, employment in May and June combined is 103,000 lower than previously reported. (Monthly
revisions result from additional reports received from businesses and government agencies since the
last published estimates and from the recalculation of seasonal factors.)
