Job Growth Slows Sharply in July With Just 73K Added; Unemployment Hits 4.2%

U.S. Job Growth Slows Sharply in July as Unemployment Rises to 4.2%

The U.S. labor market weakened significantly in July, with job gains falling short of expectations and prior months’ figures revised substantially lower—potentially reinforcing the case for Federal Reserve rate cuts.

Nonfarm payrolls rose by just 73,000 last month, according to the Bureau of Labor Statistics, missing the consensus forecast of 110,000. The unemployment rate increased to 4.2%, up from 4.1% in June.

Adding to concerns, June’s payroll gain was revised down dramatically from 147,000 to just 14,000, and May’s total was slashed from 144,000 to 19,000. Taken together, the May–July period saw average monthly job creation of just 35,000—the slowest pace since early 2020.

Market Reaction

Bitcoin (BTC) rose modestly to around $115,800 following the report, recovering from earlier losses.
The 10-year Treasury yield fell 10 basis points to 4.30%.
The U.S. dollar weakened sharply, down nearly 1% against both the euro and yen.

Earlier this week, the Federal Reserve held interest rates steady, with Chair Jerome Powell delivering a hawkish tone despite market hopes for easing. However, today’s data may shift sentiment back in favor of rate cuts.

Odds of a September Fed rate cut rose to 55%, up from 40% earlier this week, according to CME’s FedWatch tool. That’s still down from 75% a month ago.

The weak report may also complicate Powell’s position as he faces mounting political and internal pressure. President Trump has repeatedly called for lower rates, and Fed Governors Christopher Waller and Michelle Bowman both voted to cut this week.

With hiring momentum faltering and inflation trending lower, the Fed may have little choice but to reconsider its stance at its next meeting.