Jobs Shocker: July Payrolls Far Below Estimates, Follow Massive Revisions Lower

Heading into today’s jobs report, sentiment had seen a surprising boost in recent days, with the whisper number rising from just about 110K back to 125K, or where it started the month of July.

Well, the optimism proved to be very, very wrong, because moments ago the BLS reported job numbers that were very ugly with July printing just 73K, far below the 104K estimate.

But that’s not the real punchline: what is, is that Trump not only took a page out of the Biden playbook, but ripped pretty much all of it out with May and June revised massively lower, to wit:

• May was revised down by 125,000, from +144,000 to +19,000,
• June was revised  down by 133,000, from +147,000 to +14,000.

With these revisions, employment in May and June combined is 258,000 lower than previously reported, which puts to shame any/all of the far smaller revisions that defined much of the Biden regime. 

Blackrock PM Jeff Rosenberg told Bloomberg TV that the big news today is the revisions, and the main takeaway is that it raises the odds of a rate cut in September.

The number of jobs came in below the 80-100k breakeven level estimated by Fedʼs Barkin, suggesting Trump may have literally instructed the BLS to print a number that basically forces Powell’s hand to cut.

The number was even uglier in the Household survey, which showed a drop of 260K workers in July, the 3rd biggest monthly drop of 2025.

And with that the gaping disconnect between the two series is back with a vengeance.

Going down the report, the unemployment rate rose from 4.1% to 4.2%, as expected, which may be the only silver lining in today’s report as the Fed is now more focused on the unemp rate (according to Powell) than the number of jobs actually added.

Of note here is that the unemployment rate for Black workers was highest since October 2021.

The labor force participation rate, at 62.2%, dropped slightly in July from 62.3%, and has declined by 0.5% point over the year. It was the lowest since November 2022. The employment-population ratio, at 59.6%, also changed little over the month but was down by 0.4% over the year.

Turning to wages, we find that hourly earnings actually rose from an upward revised 3.8% (was 3.7%) to 3.9%, above the 3.8% expected.

Average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents, or 0.3 percent, to $36.44 in July. Over the past 12 months, average hourly earnings have  increased by 3.9 percent. In July, average hourly earnings of private-sector production and nonsupervisory employees rose by 8 cents, or 0.3 percent, to $31.34. 

The average workweek for all employees on private nonfarm payrolls edged up by 0.1 hour to 34.3 hours in July. In manufacturing, the average workweek held at 40.1 hours, and overtime edged  down to 2.8 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.7 hours in July. 

Some more details from the report:

• The number of people employed part time for economic reasons, at 4.7 million, changed little in July. These individuals would have preferred full-time employment but were working part time  because their hours had been reduced or they were unable to find full-time jobs. 
• The number of people not in the labor force who currently want a job changed little in July at  6.2 million but was up by 568,000 over the year. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were  unavailable to take a job. 
• Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force changed little at 1.7 million in July. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers decreased by 212,000 in July to 425,000, largely offsetting an increase in the prior month. Discouraged workers are a subset of the marginally attached who believed that no jobs were available for them. 

Turning to the composition of the report, the BLS reports that employment continued to trend up in health care and in social assistance. Federal government continued to lose jobs. 

• In July, health care added 55,000 jobs, above the average monthly gain of 42,000 over the prior 12 months. Over the month, job gains occurred in ambulatory health care services (+34,000) and  hospitals (+16,000).
• Social assistance employment continued to trend up in July (+18,000), reflecting continued job growth in individual and family services (+21,000). 
• Federal government employment continued to decline in July (-12,000) and is down by 84,000 since reaching a peak in January. 
• Employment showed little change over the month in other major industries, including mining,  quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; retail  trade; transportation and warehousing; information; financial activities; professional and  business services; leisure and hospitality; and other services.

The numbers were so ugly, they effectively put a 25bps rate cut in Sept front and center… maybe even 50bps. Sure enough, bond yields from the two-year through seven-years are lower by at least 10 basis points as the market sniffs out a Fed being late to cut. 

“We would look for the Fed to begin lowering rates in September,” says Gregory Faranello, head of US rates trading and strategy for AmeriVet Securities.  “It’s somewhat amazing how you can have a sitting Fed Chair intimate the strength in labor one day and receive these numbers a few days later.”

Commenting on the numbers, Bloomberg’s chief Economist Anna Wong wrote:

“July’s nonfarm payrolls were surprisingly weak, but the biggest shock was the massive revision to past data, which reduced gains for the past two months from solid to nearly zero. Adjusted for potential overstatement from the BLS’ ‘birth-death’ model, underlying job gains in July were also about flat.

“The unemployment rate, which Fed Chair Powell said earlier this week is the ‘main number’ to watch, also edged up, even as the labor force shrank for a third straight month. The main takeaway from the jobs report is that labor demand appears to be falling faster than labor supply – the labor market is not ‘solid,’ as Powell characterized it earlier this year, and we expect him to revise his opinion accordingly. We see growing chances of an earlier rate cut than our December base case.”

And here is B. Riley Wealth chief market strategist, Art Hogan,  

“Today’s jobs report is unambiguously soft and a reflection of the trade and tariff impact on economic growth. Both the actual report and the big negative revisions are more evidence that the trade policy will slow growth. What we know about our workforce population growth is that we need to create between 100 and 150,000 jobs a month to keep the unemployment rate unchanged. That is down from a range of 150 to 200,000 last year due to less immigration. The three-month average coming to today’s report was 150,000. The new three-month average of job creation is now 80,000. Not great news.”

All good points, but what really happened is that Trump finally figured out what we said last December, namely that if he wants the Fed to cut quick, he needs a labor market emergency. 

Finally he figured it out https://t.co/soBNzoHDBX

— zerohedge (@zerohedge) August 1, 2025

Well, he finally got it.