Fifth, the U.S. job market is weak. That’s after the Department of Labor knocked hiring numbers for May and June deep into the red. The report indicated a reduction in May’s hiring figures from 144,000 to just 19,000 and a drop in June’s numbers from 147,000 to a mere 14,000. Furthermore, even though the jobless rate ticked up marginally from 4.1% to 4.2%, analysts worried about what these revisions would mean.
Those ugly numbers are more than a matter of public health. President Donald Trump’s plans to raise tariffs on many major economies go into effect in a little over a week. This decision has arguably cast many companies into a sea of confusion as well, making an already difficult labor market environment even more complicated.
July Job Growth Falls Short of Expectations
What nobody expected is that under all that turbulence, the U.S. economy has been adding an average of 35,000 jobs per month since MAY. This was a big change in the July jobs creation picture. Though the July job gains were widespread, about 75% of the jobs added in July came from the healthcare sector alone. The positive news was outweighed by a major disappointment in overall job growth, sending economists and labor market analysts into a panic.
Heather Long, an economist, pointed out the gravity of the situation:
“This is a game-changer jobs report. The labour market is deteriorating quickly.”
Changes to hiring numbers are the latest in a string of ominous signs. We’re experiencing the lowest levels of expansion since the beginning of the Covid-19 pandemic. This shroud of uncertainty over potential tariffs has only added to the tense, cautious climate for employers.
Tariff Impacts on Business Costs
As companies prepare for the upcoming tariffs, many face escalating business costs that may hinder their ability to hire new workers. Joel Kan further observed that contraction in goods-producing industries for the third straight month indicates larger economic effects.
The current tariff mess has created uncertainty for companies about how they would operate going forward, which has affected their decisions to hire new employees. Then came the warnings from Federal Reserve officials — compounding the confusion. They warn that continuing to maintain interest rates at their current level risks doing permanent harm to our economic stability.
“The economy needs certainty soon on tariffs.”
The broader implications of these trends suggest that the labor market could face further deterioration if conditions do not improve. Long warned that prolonged tariff uncertainty could lead to layoffs:
Economic Growth at Risk
Michelle Bowman weighed in on the potential consequences of current policies:
“The longer this tariff whiplash lasts, the more likely this weak hiring environment turns into layoffs.”
As the situation unfolds, businesses and economists will be closely monitoring both hiring trends and the impact of tariffs on economic stability. On the upside, average hourly earnings were up 0.3% to $36.44 in July, a sign of strength in the labor market. These gains might be too little to counterbalance the larger deteriorating job market.
“It could result in a deterioration in the labour market and a further slowing in economic growth.”
As the situation unfolds, businesses and economists will be closely monitoring both hiring trends and the impact of tariffs on economic stability. With average hourly earnings rising by 0.3% to $36.44 in July, there are some positive indicators; however, they may not be sufficient to counterbalance the overall weakening job market.
