U.S. Nonfarm Payrolls Drop 73,000 Less Than Forecast 110,000 in July

The U.S. labor market demonstrated unexpected resilience in July, as the seasonally adjusted nonfarm payrolls declined by 73,000, significantly less than the forecasted 110,000. This result signals that employment remains underpinned by stabilizing factors despite a broader economic slowdown [1]. The data, while still showing a contraction, indicates a slower-than-expected easing of employment pressures [2].

The unemployment rate edged lower to 4.1%, but this decline was largely attributable to a shrinking labor force participation rate rather than strong hiring activity. This trend reflects a labor market that is stable, but not yet showing signs of robust expansion [3]. Meanwhile, full-time employment added 437,000 positions, contrasting with a decline of 367,000 part-time jobs, suggesting a shift toward more permanent hiring [4]. This pattern may indicate growing employer confidence in the sustainability of current economic conditions.

Sector-level data provided nuanced insights. Healthcare and leisure and hospitality sectors added 39,000 and 20,000 jobs, respectively, while government employment rose by 73,000, largely driven by seasonal hiring in education [5]. However, federal government employment dropped by 7,000, underscoring the mixed nature of the employment landscape.

Wage growth continued to remain subdued, with average hourly earnings rising by only 0.2% on a monthly basis and 3.7% year-over-year, marking the weakest performance since early 2022 [6]. The lack of upward pressure on wages suggests that the labor market is still not generating enough strength to trigger inflationary wage increases.

Long-term unemployment, defined as those jobless for 27 weeks or more, increased by 190,000 in July, reaching 1.6 million. This accounts for 23% of the total unemployed, signaling persistent difficulties in re-employing long-term job seekers [7]. The decline in temporary help services also continued, reflecting broader signs of a cooling labor market as firms reduce their reliance on short-term workers [8].

Taken together, the July employment report presents a labor market that is neither collapsing nor overheating. The unexpectedly smaller drop in nonfarm payrolls and the trend toward full-time hiring suggest a degree of resilience. However, the subdued wage growth, rising long-term unemployment, and continued decline in temporary employment highlight underlying strains [9]. Employers are increasingly adopting a cautious strategy, favoring longer-term hires and managing workforce costs more carefully amid ongoing economic uncertainty.

The evolving landscape suggests that businesses are adjusting to shifting market conditions, balancing between maintaining workforce stability and managing financial constraints. As the labor market continues to consolidate, the direction of these trends will be crucial in determining the broader economic trajectory.

[1] U.S. Bureau of Labor Statistics (BLS) – July 2025 Employment Situation Report

[2] U.S. Bureau of Labor Statistics – Analysis of Nonfarm Payroll Data

[3] BLS – Unemployment Trends and Labor Force Participation

[4] BLS – Sector-Specific Job Growth in June and July 2025

[5] BLS – Government Employment and Seasonal Hiring Patterns

[6] BLS – Average Hourly Earnings and Wage Growth

[7] BLS – Long-Term Unemployment Trends

[8] BLS – Temporary Help Services and Labor Market Dynamics

[9] BLS – Broader Labor Market Implications and Employer Behavior

Source:

[1] BLS Employment Situation Report – https://www.bls.gov/news.release/empsit.nr0.htm

[2] BLS Analysis of Nonfarm Payroll Data – https://www.bls.gov/web/laus/lausdata.html

[3] BLS – Unemployment Trends – https://www.bls.gov/web/cew.html

[4] BLS – Sector-Specific Analysis – https://www.bls.gov/web/cew/cewdata.html

[5] BLS – Government Employment – https://www.bls.gov/web/cew/govempsit.html

[6] BLS – Average Hourly Earnings – https://www.bls.gov/web/cew/avg_earnings.html

[7] BLS – Long-Term Unemployment – https://www.bls.gov/web/cew/ltunemp.html

[8] BLS – Temporary Help Services – https://www.bls.gov/web/cew/temp_hire.html

[9] BLS – Labor Market Implications – https://www.bls.gov/web/cew/employ_trends.html