U.S. job market showed signs of significant slowing in July, with nonfarm payrolls increasing by just 114,000—well below economists’ expectations and marking a deceleration from June’s revised gain of 179,000, according to the Labor Department’s Bureau of Labor Statistics. The unemployment rate also rose to 4.3%, the highest level since early 2023, intensifying concerns about the potential for a recession.
Economists surveyed by Reuters had anticipated an increase of 175,000 jobs for July, following a previously reported 206,000 gain in June. The actual job growth fell short of these forecasts, with estimates ranging from 70,000 to 225,000.
The slower-than-expected payroll growth is partly attributed to Hurricane Beryl, which caused widespread power outages in Texas and impacted parts of Louisiana during the survey period.
The slowdown in job growth reflects broader trends in the labor market, driven more by reduced hiring than by layoffs. This shift is largely due to the Federal Reserve’s interest rate hikes in 2022 and 2023, which have dampened business demand.
Recent government data also revealed that hiring reached a four-year low in June.
Average hourly earnings increased by 0.2% in July, a slight slowdown from the 0.3% rise in June. Over the past year, wages have risen by 3.6%, marking the smallest annual gain since May 2021 and a deceleration from the previous month’s 3.8% increase.
While wage growth remains above the Federal Reserve’s 3%-3.5% target range, the data continues to align with inflation control measures, strengthening the case for a potential interest rate cut by the Fed in September.
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