July Nonfarm Payrolls

July Nonfarm Payrolls
Updated: 01-Aug-25 09:25 ET

Highlights

Nonfarm payrolls growth was weak in July and much weaker than thought in prior months, with employment in May and June combined 285,000 lower than previously reported.
The unemployment rate was decent at 4.2%, but the U-6 unemployment rate, which accounts for underemployed workers, jumped to 7.9% from 7.7%, the labor force participation rate went down, and persons unemployed for 27 weeks or more increased to 24.9% of the unemployed from 23.3% in June.
Average hourly earnings growth was decent at 0.3% and was up 3.9% year-over-year, versus 3.8% in June.

Key Factors

July nonfarm payrolls increased by 73,000 (Briefing.com consensus: 102,000). The 3-month average for total nonfarm payrolls decreased to 35,000 from 64,000. June nonfarm payrolls revised to 14,000 from 147,000. May nonfarm payrolls revised to 19,000 from 144,000.
July private sector payrolls increased by 83,000 (Briefing.com consensus: 110,000). June private sector payrolls revised to 3,000 from 74,000. May private sector payrolls revised to 69,000 from 137,000.
July unemployment rate was 4.2% (Briefing.com consensus: 4.2%) versus 4.1% in June. Persons unemployed for 27 weeks or more accounted for 24.9% of the unemployed versus 23.3% in June. The U6 unemployment rate, which accounts for unemployed and underemployed workers, increased to 7.9% from 7.7% in June.
July average hourly earnings were up 0.3% (Briefing.com consensus: 0.3%) versus 0.2% in June. Over the last 12 months, average hourly earnings have risen 3.9% versus 3.8% for the 12 months ending in June.
The average workweek in July was 34.3 hours (Briefing.com consensus: 34.2) versus 34.2 hours in June. Manufacturing workweek held at 40.1 hours. Factory overtime dipped to 2.8 hours.
The labor force participation rate decreased to 62.2% from 62.3%.
The employment-population ratio decreased to 59.6% from 59.7%.

Big Picture

The key takeaway from the report is the soft nonfarm payrolls situation, as that will stoke concerns that the Fed is behind the curve, which in turn could stoke concerns that economic and earnings growth prospects are not as bright as currently envisaged. That could pose problems for a richly valued stock market, unless it trades through that noise and focuses on the notion that rate cuts are sure to follow.