July Jobs Report: What to Know

The Labor Department will provide its latest snapshot of the job market on Friday when it releases its monthly employment report — one that will be watched closely as the Federal Reserve looks for further signs of cooling.

The report is expected to show that American employers added 175,000 jobs in July, according to a Bloomberg survey of economists. That would be a healthy number but a downshift from June, when the labor market added 206,000 jobs.

Economists and Fed officials will also pay intense attention to other data in the report. In particular, they will focus on the unemployment rate, which ticked up to 4.1 percent in June, the first time it had surpassed 4 percent since November 2021, as well as wage gains, which have been moderating in recent months.

Fed officials left the benchmark interest rate at 5.3 percent at their meeting this week but suggested that a rate cut could be on the table at their next gathering, in mid-September.

As the Fed continues trying to bring down inflation by keeping interest rates elevated, it has also underscored that it is seeking to maintain a strong labor market and keep unemployment low. While the labor market has remained solid even as it has lost momentum, policymakers are scrutinizing labor market data for any sudden weaknesses that could suggest the Fed is waiting too long to start lowering rates.

Job gains are lately being driven by the government, health care and social assistance sectors, potentially masking broadly weaker hiring in the private sector. Job openings have fallen to 1.2 per unemployed worker in June; at the peak, in March 2022, the ratio was two to one. The number of workers unemployed for more than 26 weeks — a measure of how difficult it is to find jobs — has been increasing.

“We’re seeing this moderation in labor demand and hiring, and that’s going according to the script that the Federal Reserve would like to see,” said Kathy Bostjancic, chief economist at Nationwide. Now, she said, “we’re at these crossroads.”