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The US job market shows signs of a gradual weakening. However, new federal data issued Friday suggests that it may have hit a much-anticipated wall.
“We’re finally in the sight of a hurricane,” wrote Daniel Zhao, chief economist at career site Glassdoor, in a note.
“After months of warning signs, the July employment report confirms that the slowdown is not just nearing the near future. That’s here,” he wrote.
“Very Soft” Job Market
Employers added just 73,000 jobs in July, the Bureau of Labor Statistics reported Friday. The tally is less than expected.
Economists generally believe that the US economy needs to add around 80,000 to 100,000 jobs a month to keep up with population growth, said Laura Ulrich, actually the director of economic research in North America.
She said the contract was underway as July figures suggest the job market is not responding to population growth.
It’s even more concerning than the number in July. Employment growth rates in May and June were far weaker than initially thought, economists said.
BLS has revised the employment growth numbers for these months downhill sharply, adding to 19,000 people added in May (from the first 144,000) and 14,000 (from 147,000) in June.
Employers added 258,000 fewer jobs than they originally thought.
These monthly revisions are typical as BLS collect additional data from businesses and government agencies, but these adjustments were extraordinarily large, the economist said.
The reason is unknown, they said.
“Really, it just shows a very soft job market,” Ulrich said. “It’s not miserable. And yet, they’re a very weak number of jobs,” she said.
Economists said the numbers could be revised again in August.
Tariffs and other factors cause headwinds
Employment growth averaged 35,000 over the past three months, taking into account revised data. In contrast, for the first three months of 2025, employment growth was 111,000 a month.
According to economists, the new jobs will mainly be concentrated in the healthcare and social assistance sectors.
The data “has a completely different story about a job market that is completely different from what we originally thought,” Glassdoor’s Zhao said in an interview.
“We were under the impression that the job market was surprisingly resilient to economic headwinds like tariffs,” he said.
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President Donald Trump announced a new set of tariffs on Thursday, imposing new import operations on several trading partners ranging from 10% to 41%.
Customs duties are taxes paid by US companies on items imported.
Tariffs, if maintained for the long term, generally raise prices for many businesses and increase pressure profits by increasing input costs, economists said. Additionally, Trump’s approach to dealing with tariffs creates uncertainty for businesses and leads many to pull jobs back, the economist said.
National employment rates are the lowest since 2014, outside the early days of the Covid-19 pandemic.
“It’s difficult for people to make decisions and changes in the face of so many uncertainties,” Ulrich said.
Tariff policies combine other headwinds, including immigration policies that reduce the amount of available workers, reduced federal workforce and government spending, and higher interest rates, Zhao said.
“Advanced stagnation” in the job market
According to economists, there are other signs in the US job market.
For example, workforce participation rates have fallen to their lowest levels since 2022, Capital Economics North American economist Thomas Ryan wrote in a memo Friday.
This, he wrote, “it could be that President Trump’s immigration crackdown could be far from the labor market even if undocumented immigrants remain in the country.”
The unemployment rate also rose to 4.2% in July, up from 4.1% in June, the BLS reported.
According to BLS, the percentage of long-term unemployed means they have not been working for more than six months, but has risen from 21.6% since July 2024 to almost 25%.
One silver lining for workers: layoffs remain near historic lows.
However, low layoff environments, employment and resignation create challenges for job seekers.
“There’s a high level of stagnation right now,” Ulrich said. “There’s not much movement to come and go to work.”
