United States: Job gains undershoot expectations in July
Latest reading: U.S. nonfarm payrolls increased by just 73,000 in July 2025, falling well short of the anticipated 110,000. The June jobs total saw a major downward revision, slashed from an originally reported 147,000 to only 14,000, while May’s figure was also lowered by 125,000. Combined, these changes reveal that job growth in May and June was far lower than initially thought—indicating the labor market may be softening more quickly than expected.
In July, hiring remained strong in the health care sector, with further gains seen in social assistance. Conversely, federal government jobs continued to shrink, totaling a drop of 84,000 since January.
Panelist insight: Digging into the data, TD Economics’ Thomas Feltmate said:
“[As well as the headline payroll data,] there were plenty of other signs of weakness. The duration of unemployment rose to its highest level since early-2022, while the broader measure of unemployment also ticked higher by two-tenths, reaching a four-month high of 7.9%. Meanwhile, the breadth of hiring across private industries – while having ticked modestly higher – remains well below what’s typically seen in a more “balanced” labor market. Stability in the labor market has been a major factor keeping the Fed on the sidelines through this year. But with that narrative now shattered, and two voting members already advocating for rate cuts, the prospect of a September cut is looking increasingly likely.”