Key Takeaways
- U.S. employers likely added 100,000 jobs in July, down from 147,000 in June, according to forecasters.
- The job market has avoided mass layoffs, but has wavered in recent months as President Donald Trump’s trade war roils the economy.
- A downturn in the job market could force the Federal Reserve to cut its benchmark interest rate in the months ahead.
The July jobs report may show the slowest pace of employment growth since last fall, as trade uncertainty drags down hiring.
A report Friday from the Bureau of Labor Statistics, due to be released at 8:30 a.m. ET, is expected to show U.S. employers added 100,000 jobs, the fewest since October, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. That would be a slowdown from the 147,000 added in June. The unemployment rate is forecast to tick up to 4.2% from 4.1%, staying within the same narrow range its been since May 2024, signaling employers are reluctant to both hire and fire.
The report could indicate the toll that President Donald Trumps trade wars are having on the economy. Uncertainty around trade policy and higher prices for imports due to tariffs are weighing on both business activity and consumer confidence.
Overall, the labor market is not collapsing, but it is starting to run on tired legs, Cory Stahle, chief economist at job site Indeed, wrote in a commentary. In the months ahead, whether this slow fade becomes a stumble will depend on whether demand finds a second wind or if fatigue takes over.
A slower labor market could affect the outlook for interest rates. The Federal Reserve has kept its key interest rate high this year in an effort to push inflation down to its target of a 2% annual rate. But slower hiring could force officials to consider cutting the rate to boost the job market, and stave off a sharp increase in unemployment. The central banks dual mandate from Congress is to keep employment high and inflation low. It accomplishes that mainly by adjusting the fed funds rate, which in turn influences borrowing costs on all kinds of loans.
The Fed on Wednesday decided to leave its key rate unchanged, despite pressure from President Donald Trump to cut it. Fed Chair Jerome Powell said the Fed needs to see more data to ascertain how tariffs are feeding through the economy. Financial market participants in recent days have scaled back their expectations for the Fed to cut the benchmark rate in the coming months.
UPDATE: This article has been updated after initial publication to include information about the Feds decision on interest rates this week.
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