The U.S. job market shows signs of cooling, with employers adding an estimated 175,000 jobs in July, a slowdown from June’s 206,000. Despite a tempered pace in hiring, job security remains strong, aligning with the Federal Reserve’s goal to ease wage pressures without triggering mass layoffs.
Economists expect the Labor Department’s report to reveal a steady unemployment rate at 4.1%, according to FactSet. This marks a slowdown from an average of 222,000 new jobs per month this year, down from 377,000 in 2022.
Concerns linger over rising unemployment, which has increased over the past three months, potentially signaling recession under the Sahm Rule. However, Claudia Sahm, the economist behind the rule, suggests this time the uptick reflects an influx of new workers rather than job losses.
While layoffs hit a 1.5-year low in June, the Fed maintains interest rates at their highest in 23 years to curb inflation, which has fallen to 3% from 9.1% in 2022. The Fed aims to see further evidence of inflation decline before adjusting rates, possibly in September.
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