July’s unemployment rate matched analysts’ expectations, but other measures of the nation’s employment situation weakened as the Federal Reserve continued to reject President Donald Trump’s repeated demands that the Fed lower interest rates, data released Friday by the U.S. Bureau of Labor Statistics (BLS) reveal.
At 4.2%, July’s unemployment rate inched up from June’s 4.1% level and was unchanged from the rate recorded in the same month of 2024, in line with economists’ predictions. The unemployment rate has remained in a narrow range of 4.0% to 4.2% for more than a year (since May 2024). Likewise, July’s labor force participation rate of 62.2% remained in a narrow range, declining by 0.1 percentage point from June.
“Total nonfarm payroll employment changed little in July (+73,000) and has shown little change since April,” the U.S. Bureau of Labor Statistics (BLS) reported. Job growth for the month fell far short of 115,000 jobs analysts anticipated.
Downward revisions for May and June were larger than normal. The change in total nonfarm payroll employment growth for May was revised down by 125,000, from 144,000 to 19,000, and the change for June was lowered by 133,000, from 147,000 to 14,000. With these revisions, employment growth in May and June combined is now estimated to be 258,000 lower than previously reported.
By sector, July’s changes in employment followed the trends of recent months, as health care added 55,000 jobs, above the average monthly gain of 42,000 over the prior 12 months, while federal government employment continued to decline (-12,000), falling 84,000 since reaching a peak in January. Employment showed little change over the month in other major industries.
July’s numbers underscore the need for the Fed to lower interest rates, which it failed to do on Wednesday when it voted 9-2 to leave key rates unchanged.
However, Wednesday’s vote marked the first time in more than 30 years (since 1993) that at least two members of the Federal Open Market Committee dissented in a vote. Governor Christopher Waller and Fed Vice Chair Michelle Bowman had wanted a quarter percentage point cut and voted against the decision. Both reportedly released statements reacting to Friday’s employment report, stressing the urgent need to lower interest rates.
Fed Chairman Jerome Powell has stubbornly rejected Pres. Trump’s repeated calls for lower interest rates, to the point that the president is reportedly considering firing him.
Worse, Powell had seen the weak employment data before it was released to the public on Friday – but, still refused to support lowering rates – Fox Business’ Maria Bartiromo noted, reacting to the report:
“These downward revisions show a lot more about this economy in the last couple months, and we are learning this now in, you know, the first day of August, for the month of July and the month of June, that things were weakening, Jay Powell had access to that.
“How is it possible that he went forward and did not cut interest rates – even as he saw all of this data?”
“That’s why we had two dissenters,” Bartiromo explained.
The “Mornings with Maria” host when on to suggest that vanity may be driving Powell’s refusal to comply with Trump’s insistence that he lower rates, because the Fed chair doesn’t want to be perceived as “a pushover,” causing him “to stand firm in face of data that clearly indicates should have been moving in the other direction.”
In comparison, at 4.25%-4.50%, U.S. interest rates are more than two percentage points higher – or nearly double – those of many major European countries with similar economies.