The US Department of Labor released a report on Friday (August 1) showing that the number of new non-farm jobs added in July was 73,000, lower than expected, with the unemployment rate slightly increasing to 4.2%. President Trump urged the Federal Reserve to immediately cut interest rates significantly.
According to the data from the Bureau of Labor Statistics, the 73,000 new non-farm jobs added in July were lower than the Dow Jones prediction of 100,000 but higher than the 14,000 in June.
The employment report also significantly revised the employment data for May and June. The number of new non-farm jobs added in May was revised down from the previously reported 144,000 to 19,000; while the related employment data for June was revised down from the previously reported 147,000 to 14,000.
The unemployment rate rose to 4.2% in July, in line with expectations.
In terms of specific industries, the healthcare industry led the job growth, adding 55,000 jobs in July, higher than the monthly average increase of 42,000 over the previous 12 months. Other industries with significant increases in new employment include social assistance (18,000), retail (nearly 16,000), and finance (15,000).
Federal government employment declined by 12,000 in July, while professional and business services lost 14,000 jobs.
Looking at the average hourly wages closely watched as an inflation indicator, they increased by 0.3% in July to $36.44 per hour, in line with expectations; on a year-on-year basis, they increased by 3.9%, slightly higher than expected.
According to CNBC, Heather Long, Chief Economist at Navy Federal Credit Union, said, “This is a disruptive employment report.”
“The labor market is rapidly deteriorating,” Long said.
This weak report, including significant downward revisions to the employment data, may prompt the Federal Reserve to take action to cut interest rates at its September policy meeting.
Data from the CME Group showed that after the report was released, futures traders increased the probability of a rate cut in September from 40% on Thursday to 75.5%.
Ger Doyle, President of ManpowerGroup in North America, said, “Today’s report further confirms the trend of slowing but continuing cooling of the economy. While the labor market has not yet plunged into crisis, hiring momentum continues to weaken, and pressure is increasing.”
Beth Hammack, President of the Federal Reserve Bank of Cleveland, stated to Bloomberg that although the latest employment data released on Friday is undoubtedly a disappointing report, the US labor market still appears to be healthy.
President Trump took to his social media platform Truth Social on Friday morning to once again urge Federal Reserve Chair Powell to cut interest rates immediately.
“Powell is a disaster. Cut rates!” Trump said in a post.
In another post he made earlier, Trump stated that Powell “must cut rates significantly now.” If Powell continues to refuse to cut rates, the Federal Open Market Committee (FOMC) should regain control and do what needs to be done.