US job growth slows sharply in July, jobless rate rises

The US added 114,000 nonfarm jobs in July, much less than expected, as the jobless rate rose and average hourly earnings growth fell, all signs of an almost certain rate cut from the Federal Reserve next month.

Job gains followed downwardly revised gains of 179,000 in June and 216,000 jobs in May, the Bureau of Labor Statistics reported today. Gains were revised down by 29,000 for the two months.

Gains in July were well below the average 215,000 jobs added monthly for the prior 12 months.

The unemployment rate rose to 4.3pc from 4.1pc.

Fed policymakers this week kept their target rate unchanged at 5.25-5.5pc, a 23-year high, but Fed chief Jerome Powell said a possible rate cut was "on the table" for September should the data — especially easing inflation pressures and weakening labor market conditions — keep moving in the right direction.

After the jobs report today, the CME's FedWatch tool showed 67.5pc odds of a 50 basis point cut, and 32.5pc probability of a 25 basis point cut at the September meeting, compared with 22pc and 72pc odds, respectively, on Thursday.A rate cut in September would come less than two months before the November national election and would be the first cut since early 2020, when Covid-19 struck the US.

Job gains were led by health care, construction, transportation and warehousing.

Health care added 55,000 jobs, construction added 25,000 and transportation and warehousing added 14,000 jobs. Manufacturing added 1,000 jobs compared with losses of 9,000 jobs in June. Mining, which includes oil and gas exploration and production, shed 1,000 jobs.

Average hourly earnings rose by an annual 3.6pc, down from 3.8pc in June and the lowest since May 2021.

By Bob Willis