Job market weakens as U.S. employers add only 73,000 jobs in July

In July 2025, the job market in the United States displayed significant signs of weakness, coinciding with the imposition of President Donald Trump's tariffs. According to a report from the Labor Department, only 73,000 jobs were added during the month, a number that starkly contrasts with previous expectations for growth. Furthermore, gains in employment for both May and June were revised sharply downward, indicating a broader trend of stagnation in job creation. As a result, the unemployment rate increased slightly to 4.2%, marking a troubling development in the labor market. The health care sector was one of the few areas that showed solid growth amidst the overall decline, suggesting that essentials remain stable even when other industries struggle. In contrast, the federal government experienced a substantial workforce reduction, shedding 12,000 jobs in July alone, which brought the total loss of federal jobs in 2025 to approximately 84,000. Many federal employees have taken buyouts but will be counted as employed until the end of September, further muddying the waters of employment statistics. Manufacturing faced particular challenges, as factories reportedly lost 11,000 jobs in July, despite the expectation that domestic manufacturers would benefit from the tariffs. Factory owners reported feeling the strain of tariff-induced uncertainty, which has led to decreased orders and operational disruptions. An anonymous factory manager articulated widespread frustration, indicating that the unclarity surrounding import taxes has severely impacted decision-making and financial planning. The overall decline in job creation and the rise in unemployment are notable concerns that might prompt calls for the Federal Reserve to consider lowering interest rates to support economic growth. Despite the slowdown in hiring, average wages rose by 3.9% from the prior year in July 2025, potentially outpacing inflation and suggesting that while hiring is weak, compensation may be on a positive trajectory. This mixed economic signal demonstrates a complex landscape where labor market weaknesses are protective of some economic indicators, positioning policymakers in a challenging position as they navigate the tariffs' broader implications.