July jobs report: Sluggishness in the summer
Daniel Zhao
Chief Economist at Glassdoor | Aug 1, 2025
The latest jobs numbers are out from the U.S. Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor’s Chief Economist Daniel Zhao.
The jobs market has slowed sharply over the last three months in the first surprisingly negative jobs report in many months. In a rare event, the downward revisions to previous months are the headline to today’s jobs report with downward revisions bringing the May and June job gains close to stall speed. Three months removed from Liberation Day, the job market has begun to cool. Even as President Trump backed down from the most extreme tariffs proposed on Liberation Day, businesses have been cautious about hiring.
Key stats
- Payroll employment grew 73,000 in July, slightly below expectations, but crucially downward revisions to May and June are a concern that the job market has slowed more sharply than originally thought with May revised from 144,000 jobs added down to 19,000 and June from 147,000 to 14,000.
- The unemployment rate rose to 4.2% married with a small decline in the labor force participation rate to 62.2%
- Average hourly earnings picked up to 3.9% year-over-year in July, accelerating slightly from 3.8% in June, a reminder that the Federal Reserve faces a difficult balance to cut rates and support the job market when inflation remains above its 2% target.
Downward revisions headline a weak report
Total nonfarm payroll employment grew 73,000 in July, below expectations, but the downward revisions brought May and June close to a standstill. Private payrolls in particular were almost unchanged in June after the revisions.
In June, the jobs report came in higher than expectations in large part due to a spike in jobs growth in state & local government education which was originally reported as 64,000 jobs added in June. This spike was unusual and has mostly disappeared after revisions released in today’s jobs report. The previously reported 64,000 job gains has been revised downward to a more plausible 7,500 jobs added.
Preliminary benchmark release coming next month
Looking ahead to the August jobs report, the CES’s preliminary benchmark will be released on September 9. The preliminary benchmark is likely to show a significant negative revision to the March 2025 benchmark employment level. The benchmark process resets the CES’s estimated payroll employment level against the slower arriving but more comprehensive administrative data from the QCEW. The final benchmark revisions won’t be released until early 2026, but it’s possible that with the downward revisions, some of these months of extremely low jobs growth like May and June will be revised to outright job losses, breaking the streak of consecutive job gains since the pandemic recovery began.
More insights
The downward revisions for May and June were largest in government, but almost every major industry saw downward revisions across the two months.
Health care and social assistance is singlehandedly holding the job market above water right now. Excluding health care and social assistance, all other industries have lost jobs on net in May, June and July. Health care has been a steady contributor to jobs growth since early 2022 but when jobs growth is so thin, that raises concerns about the sustainability of growth, especially as federal spending cuts and Medicaid cuts loom.
A broader view over time shows slowdowns in some of the big jobs drivers from H2 2024 to H1 2025 as leisure & hospitality, health care, education and government have all slowed. Other industries like construction and transportation & warehousing have also slowed while professional & business services has been a consistent drag, losing jobs for much of the last 2 years.
Average hourly earnings rose 3.9% year-over-year in July. The labor market is not exceptionally tight such that we should be worried about wages contributing significantly to overall inflation, but it is a reminder that the Fed is walking a tightrope right now in supporting a slowing job market while inflation remains above target.
The unemployment rate ticked up to 4.2% from 4.1%. Not flashing warning signs yet as its mostly stayed in the 4–4.2% range for the last year. The labor force participation rate also dropped to 62.2% in July and is shrinking as the U.S. workforce ages.
The Black unemployment rate also surged even more, rising from 6% in May to 7.2% in July, the highest level since 2021. This is especially concerning for Black workers as sluggish hiring also makes it hard for laid-off workers to find new work.
To speak with Daniel Zhao about this report, please contact pr@glassdoor.com.
Daniel Zhao
Daniel Zhao is Chief Economist at Glassdoor. On Glassdoor's Economic Research team, he has conducted research using Glassdoor's unique data on a variety of topics affecting job seekers and employers ranging from the health of the job market to pay transparency to employee engagement & retention. His work has been cited in publications like the New York Times, the Harvard Business Review and more. Prior to joining the Economic Research team, he also worked on improving the user experience for Glassdoor’s consumer jobs product and mobile app. He holds a bachelor's degree in applied mathematics and economics from Harvard College.
