Hiring Slows to a Crawl as Tariff Jitters Rattle US Job Market

The US job engine is losing steam — fast.

Employers added just 73,000 jobs in July, the weakest monthly gain since the height of the pandemic recovery slowdown, and a far cry from the 115,000 economists were expecting. On top of that, job gains from May and June were quietly slashed by a staggering 258,000, a revision that’s got economists sounding the alarm.

“This is absolutely the worst major economic report since the end of the pandemic era,” said Joe Brusuelas, chief economist at RSM US.

While the unemployment rate edged up to 4.2%, the more worrying trend is how uneven and fragile job growth has become. Nearly all of July’s gains came from health care and social assistance, which added 73,000 jobs — essentially carrying the entire report.

Other sectors? Not so lucky.

• Manufacturing lost 11,000 jobs — the third month in a row of losses — as Trump’s steep tariffs continue to raise costs and rattle supply chains.
• Federal government jobs fell by 12,000, bringing the total loss this year to 84,000 amid deep cuts from the White House.
• Leisure and hospitality added just 5,000 jobs — a dismal figure during what’s supposed to be peak season.
• State and local governments barely moved the needle, gaining just 2,000 jobs in July.

Economist Diane Swonk put it bluntly:

“The labor market’s down to a one-legged stool, and that’s dangerous.”

The hiring freeze comes amid growing uncertainty over President Trump’s economic policies, especially around trade. The latest round of tariffs on dozens of countries has left businesses skittish about expansion and reluctant to commit to new hires.

“Tariffs and uncertainty are paralyzing employers,” said Gregory Daco of EY-Parthenon. “It’s hard to pull the trigger on hiring when you don’t know what’s coming next.”

There was at least one silver lining: Wages climbed 3.9% over the past year, which still beats inflation. But with employers getting cautious, there’s no guarantee that pace will continue.

The weak report is already pushing up expectations of a Fed rate cut in September. Traders are now pricing in a 67% chance the central bank will step in to lower borrowing costs, hoping to give the economy a nudge.

What makes this report particularly troubling is not just the low headline number — but the broader picture. Fewer industries are hiring, people are dropping out of the workforce, and even sectors that usually surge in summer are stalling.

“This isn’t just a slowdown,” said Pantheon’s Oliver Allen. “It’s a warning sign.”

With more tariffs looming and government jobs under the knife, the job market could get even shakier in the coming months — and that has economists, investors, and workers alike bracing for what’s next.

With input from CNN, NPR, Reuters, and the New York Times.