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US: Employment Situation
| Consensus | Consensus Range | Actual | Previous | Revised | |
| Nonfarm Payrolls - M/M | 88,000 | 50,000 to 140,000 | -23,000 | 57,000 | 20,000 |
| Unemployment Rate | 4.2% | 4.1% to 4.3% | 4.1% | 4.2% | |
| Private Payrolls - M/M | 90,000 | 40,000 to 110,000 | 30,000 | 49,000 | 30,000 |
| Manufacturing Payrolls - M/M | 4,000 | 2,000 to 9,000 | 5,000 | 3,000 | 11,000 |
| Participation Rate | 61.4% | 61.5% | |||
| Average Hourly Earnings - M/M | 0.3% | 0.3% to 0.3% | 0.1% | 0.3% | |
| Average Hourly Earnings - Y/Y | 3.5% | 3.5% to 3.5% | 3.2% | 3.5% | |
| Average Workweek | 34.3hrs | 34.2hrs to 34.3hrs | 34.3hrs | 34.3hrs |
Highlights
The U.S. economy unexpectedly lost jobs in July, indicating underlying weakness in the labor market – which, if there is a similar report for August, will keep the Federal Reserve on hold at its September FOMC meeting. Downward revisions to May and June payroll numbers – now collectively much lower than previously reported, combined with a 264,000 contraction in the labor force, point to a lackluster labor market.
The U.S. economy shed 23,000 jobs in July, falling significantly short of expectations for +88,000 in the Econoday survey of forecasters. The unemployment rate dipped to 4.1 percent, also below expectations for 4.2 percent.
June’s nonfarm payroll employment was revised down from +57,000 to +20,000, and the change for May was also revised down from +129,000 to +63,000. With these revisions, employment in May and June combined is 103,000 higher than previously reported.
The labor-force participation rate was at 61.4 percent in compared to 61.5 percent in June. The rate was 62.2 percent for the same month a year ago.
Private service-sector payrolls grew by 30,000 after also increasing by 30,000 in June.
Government employment contracted by 53,000 in July following losses of 10,000 in June, fueled by a drop in local government employment (-57,000) – largely reflecting 49,600 jobs cut in local government education.
Retail trade shed 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). The AI impact on job security in the financial sector continues, with 14,000 jobs lost in July and employment down 12,000 since peaking in May 2025.
There was a slowdown in manufacturing payrolls growth, up by 5,000 after adding 11,000 in June, although there was an 18,000 rise in hiring by employers manufacturing durable goods. Construction was another bright spot in the goods-producing sector, adding 22,000 jobs last month after growing by 5,000 in June.
Meanwhile job growth in the service-providing private sector eased noticeably to +5,000 in July from +16,000 and +58,000 in June and May, respectively.
Average hourly earnings are up just 0.1 percent in July, compared to +0.3 percent in June. Wages are up 3.2 percent compared to a year ago.
Market Consensus Before Announcement
A moderate 88K rise in nonfarm payrolls is the call for July with no change in the jobless rate at 4.2 percent.
Definition
The most closely watched of all economic indicators, the employment situation is a set of monthly labor market indicators based on two separate reports: the establishment survey which tracks 650,000 worksites and offers the nonfarm payroll and average hourly earnings headlines and the household survey which interviews 60,000 households and generates the unemployment rate.
Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.
The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.
Description
If ever there was an economic report that can move the markets, this is it! The anticipation on Wall Street each month is palpable, the reactions can be dramatic, and the information for investors is invaluable. By digging just a little deeper than the headline unemployment rate, investors can take more strategic control of their portfolio and even take advantage of unique investment opportunities that often arise in the days surrounding this report.
The employment data give the most comprehensive report on how many people are looking for jobs, how many have them, what they're getting paid and how many hours they are working. These numbers are the best way to gauge the current state as well as the future direction of the economy. Nonfarm payrolls are categorized by sectors. This sector data can go a long way in helping investors determine in which economic sectors they intend to invest.
The employment statistics also provide insight on wage trends, and wage inflation is high on the list of opponents of easy monetary policy. Fed officials constantly monitor this data watching for even the smallest signs of potential inflationary pressures, even when economic conditions are soggy. If inflation is under control, it is easier for the Fed to maintain a more accommodative monetary policy. If inflation is a problem, the Fed is limited in providing economic stimulus.
By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events. In contrast, when job growth is slow or negative, then interest rates are likely to decline - boosting up bond and stock prices in the process.
Importance
The employment situation is the primary monthly indicator of aggregate economic activity because it encompasses all major sectors of the economy. It is comprehensive and available early in the month. Many other economic indicators are dependent upon its information. It not only reveals information about the labor market, but about income and production as well. In short, it provides clues about other economic indicators reported for the month and plays a big role in influencing financial market psychology during the month. Additionally, the Fed has made 6.5 percent unemployment a threshold for considering changes in policy - both for quantitative easing and the fed funds rate. And the Fed has emphasized that it is overall labor market conditions that matter - not just a specific number.
Interpretation
The bond market will rally (fall) when the employment situation shows weakness (strength). The equity market often rallies with the bond market on weak data because low interest rates are good for stocks. But sometimes the two markets move in opposite directions. After all, a healthy labor market should be favorable for the stock market because it supports economic growth and corporate profits. At the same time, bond traders are more concerned about the potential for inflationary pressures.
The unemployment rate rises during cyclical downturns and falls during periods of rapid economic growth. A rising unemployment rate is associated with a weak or contracting economy and declining interest rates. Conversely, a decreasing unemployment rate is associated with an expanding economy and potentially rising interest rates. The fear is that wages will accelerate if the unemployment rate becomes too low and workers are hard to find.
Nonfarm payroll employment indicates the current level of economic activity. Increases in nonfarm payrolls translate into earnings that workers will spend on goods and services in the economy. The greater the increase in employment, the faster is the total economic growth. When the economy is in the mature phase of an expansion, rapid increases in employment cause fears of inflationary pressures if rapid demand for goods and services cannot be met by current production.
When the average workweek trends up, it supports production gains in the current period and portends additional employment increases. When the average workweek is in a declining mode, it probably is signaling a potential slowdown in employment growth-or even outright declines in employment in case of recession.
Gains in average hourly earnings represent wage pressures. It is worth noting that these figures aren't adjusted for overtime pay or shifts in the composition of the workforce, which affects wages on its own. Market participants believe that a rising trend in hourly earnings will lead to higher inflation. But if increased wages are matched by productivity gains, producers likely will not increase product prices with wages because their unit labor costs are stable.
