US Job Growth Slowed in July—Key Takeaways

The weak number comes with downward revisions of previous months. But the Atlanta Federal Reserve chief said ’the labor market still looks good.’

A worker prepares to lift a steel beam with a crane at Central Steel Supply Company in Marlborough, Mass., on March 13, 2025. Joseph Prezioso/AFP via Getty Images

The U.S. economy created a smaller-than-expected 73,000 new jobs in July, causing concerns that the labor market could be in trouble.

But while the headline number signaled a potential slowdown ahead, changes to initial estimates over the last two months have captured Wall Street’s attention.

U.S. stocks were in a sea of red to finish the trading week on Aug. 1. The tech-heavy Nasdaq Composite Index plunged about 2 percent, while the blue-chip Dow Jones Industrial Average and the broader S&P 500 erased more than 1 percent.

“Business demand for labor is slowing, adding uncertainty to the growth trajectory for the latter half of this year,” Jeffrey Roach, chief economist for LPL Financial, said in a note emailed to The Epoch Times.

Here are key takeaways from the July report.

Revisions and Collections

Sizable revisions of federal government data show the U.S. economy added 33,000 new jobs in May and June.

The federal agency reported that May’s employment gains were adjusted lower by 125,000 to 19,000. The June payroll increase was altered downward by 133,000 to 14,000.

While revisions have been a key trend in recent years, the federal agency noted that the “revisions for May and June were larger than normal.”

According to former White House economist Ernie Tedeschi, this was the largest two-month downward revision to payroll data since 1979, excluding the pandemic.

In the first six months of the year, downward adjustments have totaled 461,000.

Revisions have become a common problem for the Bureau of Labor Statistics in recent years. For example, the actual January-through-June employment gains were almost 600,000 lower than initially reported.

Also, following the Department of Labor’s annual benchmark revisions, it was determined that U.S. job creation was overstated by 818,000 in the 12 months through March 2024.

In the aftermath of the July jobs report, many are wondering how government statisticians are getting the data wrong.

The Bureau of Labor Statistics often revises initial numbers after obtaining additional data. “Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors,” it says.

Officials also use statistical models to adjust seasonal hiring patterns and will release annual benchmark revisions based on unemployment insurance records.

The U.S. Department of Labor in Washington on Jan. 14, 2025. Madalina Vasiliu/The Epoch Times

Another challenge has been declining response rates.

Response rates for the establishment portion of the monthly payrolls report—a monthly survey of more than 100,000 businesses and government agencies—have fallen from 61 percent in April 2015 to below 43 percent.

Experts have attributed this trend to a scarcity of resources, outdated methods of collection, and inadequate survey designs. This can lead to poor data quality and skewed results.

President Donald Trump, in an Aug. 1 Truth Social post, stated that he has ordered the immediate termination of Erika McEntarfer, commissioner of the Bureau of Labor Statistics.

“We need accurate jobs numbers,” he said. “She will be replaced with someone much more competent and qualified.”

What This Means for the Fed

Is the Federal Reserve behind the curve?

“Too little, too late,” the president said in a Truth Social post shortly after the July jobs data were released. “Jerome ‘Too Late’ Powell is a disaster. Drop the rate!”

Following the July policy meeting, the interest rate-setting Federal Open Market Committee said in a statement that “the unemployment rate remains low, and labor market conditions remain solid.”

Fed Chair Jerome Powell, speaking to reporters at the post-meeting press conference, stated that employment conditions are “kind of still in balance.”

“You do not see a weakening in the labor market. You do see a slowing in job creation, but also in a slowing in the supply of workers,” Powell said on July 30.

“So, you’ve got a labor market that’s in balance, albeit partially because both demand and supply for workers is coming down at the same pace.”

A chorus of monetary policymakers has expressed the same sentiment in the aftermath of the July data.

In an Aug. 1 interview with CNBC, Atlanta Fed President Raphael Bostic agreed that the latest reading and data revisions depict a slowdown “in a significant way.” At the same time, Bostic said, “the labor market still looks good.”

Bostic also noted that he would not have changed his decision to support keeping interest rates steady if this information were available at the time.

“There is still a lot of strength underlying the labor market,” he said, pointing to solid wage growth and low unemployment.

“I still am not hearing from businesses that they’re on the verge of letting go [of] a lot of people,” Bostic added.

Leading up to the July meeting, two key central bank officials warned about weakness building in the U.S. labor market.

Fed Gov. Christopher Waller and Fed Vice Chair for Supervision Michelle Bowman—the two dissenting votes at this week’s policy meeting—argued that the institution needs to lower rates now to prevent further deterioration in the jobs arena.

Fed Chair Jerome Powell speaks with Michelle Bowman, vice chair for supervision, during an open meeting at the Federal Reserve Board building in Washington on June 25, 2025. Saul Loeb/AFP via Getty Images

“I see the risk that a delay in taking action could result in a deterioration in the labor market and a further slowing in economic growth,” Bowman said in an Aug. 1 statement.

Being proactive would prevent “unnecessary erosion in labor market conditions,” and ensure the Fed does not experience a “significantly larger policy correction at a future date,” Bowman added.

The futures market is now betting on a September rate cut.

According to the CME FedWatch Tool, the odds of a quarter-point reduction to the benchmark federal funds rate at next month’s meeting stand at 83 percent.

This is a complete reversal from the 52 percent chance that the Fed would hold rates steady.

“Job growth hit the brakes in July, and that could be just what the Fed needs to ease off the gas. A weak 73,000 [result] and rising unemployment may push policymakers to rethink their stance,” Gina Bolvin, president of Bolvin Wealth Management, said in a note emailed to The Epoch Times.

Immigration Crackdown

Cleveland Fed President Beth Hammack, in an Aug. 1 interview with Bloomberg Television, says the headline numbers are unsurprising, “given what we’ve seen happening on the immigration side.”

Since the coronavirus pandemic, immigrants have played a pivotal role in the job data, creating a divergence between employed U.S.- and foreign-born workers. The gap has narrowed this year.

Employment levels for U.S.-born workers have increased by nearly 2.5 million since January. Conversely, payrolls for foreign-born workers have declined by 1.01 million.

The current administration has embarked upon a massive deportation campaign. Citing labor force data, White House Deputy Chief of Staff for Policy Stephen Miller estimated that there have been more than 1 million self-deportations.

According to the Bureau of Labor Statistics, the civilian labor force level for foreign-born workers has declined by 1.241 million year-to-date.

“We’re going to see millions and millions more self-deportations,” Miller said.

The immigration crackdown is starting to take a toll on the labor market, say economists at Capital Economics.

“After stemming the inflow of unauthorized immigration over the Southwest border, the Trump administration now appears to be gradually ramping up the number of detentions and removals,” they said in a July 9 note. “This crackdown is beginning to have a more marked impact on labor supply, with the foreign-born labor force shrinking by more than 1 million people in the last four months.”

Market watchers have warned about the growing labor challenges facing the U.S. economy, with more than 7 million job openings and 75 percent of employers unable to fill job vacancies.