Job Market Weakens in July
Job gains came in well below expectations. June and May numbers were revised downward.
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Updated on July 31.
What are the weekly jobless claims?
Initial jobless claims went up for the week ending July 26, according to the report released on July 31.
Why it matters: The weekly jobless claims, or initial claims, are the number of unemployment insurance claims filed in the past week. They provide an indicator of the strength — or weakness — of the labor market.
The unemployment rate ticked up to 4.2% in July, compared to 4.1% in June, according to the jobs report released on Aug. 1 by the Bureau of Labor Statistics (BLS).
Here are some other takeaways from the report:
Job gains came in below projections in July with a total of 73,000. The consensus estimated monthly expectation was a 117,500 increase, according to Morningstar, an investing firm.
Job gains in the previous two months were revised down significantly: From 144,000 to 19,000 in June and 147,000 to 14,000 in May.
Employment rose in health care and social assistance.
For the sixth month in a row, employment went down in the federal government due to mass federal workforce cuts made by the so-called Department of Government Efficiency (DOGE). Employees on paid leave or receiving severance are considered employed, which means the full effect of the cuts are yet to show up in the report.
Average hourly earnings of all private nonfarm employee payrolls rose by 3.9% over the past 12 months from $35.07 per hour in July 2024 to $36.44 per hour in July 2025.
What the latest job market data means for you
The July jobs report shows that the labor market is cooling, demonstrated by modest job growth for the month and major downward revisions to jobs added in May and June (a combined total of -258,000).
Wage growth (3.9%) remains above inflation growth (2.6%), which means consumers are more likely to remain resilient in the face of price increases — that is, unless there are price shocks. The effect of tariffs on prices haven’t fully set in so it’s unclear how that might impact inflation growth.
There are some vulnerabilities in the job market continuing to trend, including more workers remaining in long-term unemployment, which shows workers may be having more difficulty re-entering the job market. The labor force participation rate also remains sluggish.
Both the health care and social assistance sectors showed strong labor demand, while the number of federal government jobs continued to wane.
Overall, the latest data reflects growing caution among employers as the projected economic picture remains hazy.
What a NerdWallet expert says
Elizabeth Renter, economist at NerdWallet, says recent jobs reports show continued cooling in the labor market, but it’s not “fully on-ice.”
“Fewer jobs are being added, hiring continues to slow and workers aren’t quitting their jobs with expectations of finding another quickly. This hard data continues to confirm what we’ve heard from consumer sentiment (“soft”) data about the labor market — that there are fewer jobs available, and that folks are less optimistic about their ability to hold onto their current role. That said, the unemployment rate remains steady and layoffs aren’t climbing.”
What you can do next
Learn more about how the economy is doing
Explore ways to track monthly expenses
Find out what to do next if you’re laid off
What is the current unemployment rate?
The current unemployment rate is 4.2% for July, a 0.1 percentage point increase from June (4.1%). The rate is higher than unemployment rates during 2023 and 2024.
Is unemployment rising or falling?
The current unemployment rate is 4.2% for July, a 0.1 percentage point increase from June (4.1%). The rate is higher than unemployment rates during 2023 and 2024.
The unemployment rate went up by 0.1 percentage point in January, February and March, but was unchanged in April.
» MORE: What is the minimum wage?
Are wages increasing?
Wage growth is moderating from what it was a year ago but is still higher than it was pre-pandemic, according to data from the Federal Reserve Bank of Atlanta. The three-month moving average of median hourly wage growth — when measured over the previous 12 months — has slowed from its peak in the summer of 2022.
For June, the three-month wage growth percent change was 4.2%, which is in line with the three-month moving average rate since November 2024.
The 12-month moving average for all workers — part-time and full-time — was 4.3% in June, a 0.1 percentage point decline from May. By comparison, the percent change for June 2024 from a year prior was 5.1%. If you look back even further, at the percent change for June 2020 from a year prior, the rate was 3.6%.
» MORE: What is the minimum wage?
Below, the Federal Reserve Bank of Atlanta data for June shows a steady three-month moving average of wage growth compared to peak rates in June 2022 and July 2022.
More key jobs data and what it means
(Photo by Spencer Platt/Getty Images News via Getty Images)