{"id":51344,"date":"2025-08-01T08:38:16","date_gmt":"2025-08-01T12:38:16","guid":{"rendered":"https:\/\/stockmarketwatch.com\/stock-market-news\/u-s-jobs-growth-slows-significantly-in-july-fueling-fed-rate-cut-expectations\/51344\/"},"modified":"2025-08-01T08:38:16","modified_gmt":"2025-08-01T12:38:16","slug":"u-s-jobs-growth-slows-significantly-in-july-fueling-fed-rate-cut-expectations","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/u-s-jobs-growth-slows-significantly-in-july-fueling-fed-rate-cut-expectations\/51344\/","title":{"rendered":"U.S. Jobs Growth Slows Significantly in July, Fueling Fed Rate Cut Expectations"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>U.S. Nonfarm Payrolls in July significantly missed expectations, rising by only 73,000 against an estimated 104,000, and sharply down from the revised previous month&#39;s 147,000.<\/strong><\/li>\n<li><strong>The unemployment rate edged up to 4.2% from 4.1%, aligning with estimates.<\/strong><\/li>\n<li><strong>Market futures now indicate a 75% probability of the Federal Reserve cutting interest rates by 25 basis points at its September meeting, a substantial increase from 45% before the jobs data release.<\/strong><\/li>\n<li><strong>U.S. Treasury yields fell following the report, with two-year yields dropping 8 basis points to 3.871%, while the dollar weakened against the yen.<\/strong><\/li>\n<li><strong>Average hourly earnings showed mixed signals, with a month-over-month increase of 0.3% meeting estimates, but a year-over-year rise of 3.9% exceeding both previous figures and expectations.<\/strong><\/li>\n<\/ul>\n<p>The U.S. labor market showed signs of significant cooling in July, with Nonfarm Payrolls coming in well below forecasts, prompting a sharp increase in expectations for a Federal Reserve interest rate cut as early as September. The data suggests a less dynamic labor market, which could influence the Fed&#39;s monetary policy stance.<\/p>\n<h2>July Jobs Report Details<\/h2>\n<p>The U.S. economy added <strong>73,000<\/strong> Nonfarm Payrolls in July, a notable deceleration from the prior month&#39;s revised <strong>147,000<\/strong> and falling short of the <strong>104,000<\/strong> consensus estimate. Private payrolls also saw a slowdown, increasing by <strong>83,000<\/strong> against an estimated <strong>100,000<\/strong>. Manufacturing payrolls continued to decline, dropping by <strong>11,000<\/strong>, while government payrolls also decreased by <strong>10,000<\/strong>. The three-month average change for Nonfarm Payrolls plummeted to <strong>35,000<\/strong> from a previous <strong>150,000<\/strong>.<\/p>\n<p>The unemployment rate inched up to <strong>4.2%<\/strong> in July from <strong>4.1%<\/strong> in June, aligning with analysts&#39; expectations. Average hourly earnings, a key inflation indicator, presented a mixed picture. On a month-over-month basis, earnings rose by <strong>0.3%<\/strong>, matching estimates. However, the year-over-year increase was <strong>3.9%<\/strong>, higher than the <strong>3.7%<\/strong> previous figure and the <strong>3.8%<\/strong> estimate.<\/p>\n<h2>Federal Reserve Implications and Commentary<\/h2>\n<p>The weaker-than-expected jobs data has significantly shifted market sentiment regarding the Federal Reserve&#39;s next move. Futures markets are now pricing in a <strong>75% chance<\/strong> of a <strong>25-basis-point interest rate cut<\/strong> at the Fed&#39;s September meeting, a substantial jump from the <strong>45%<\/strong> probability observed before the payrolls report.<\/p>\n<p>Recent comments from Federal Reserve officials underscore the evolving policy debate. Governor Michelle Bowman stated that with slowing growth and a less dynamic labor market, it is <em>appropriate to begin gradually moving the moderately restrictive policy stance toward a neutral setting<\/em>. Bowman also warned that delaying action could worsen the labor market and slow economic growth, emphasizing the need for more focus on employment risks.<\/p>\n<p>Similarly, Governor Christopher Waller, who previously dissented on a rate decision, reiterated his belief that a <strong>25-basis-point reduction was appropriate<\/strong>. Waller suggested that data now argues for monetary policy to be near neutral, rather than restrictive, and that policymakers should &quot;look through&quot; tariffs as a one-time price event if inflation expectations remain anchored. He stressed there&#39;s &quot;no need to keep policy rate same and risk sudden drop in jobs.&quot;<\/p>\n<h2>Market Reaction<\/h2>\n<p>In response to the jobs report, U.S. Treasury yields fell across the curve. The <strong>two-year Treasury yield<\/strong> dropped <strong>8 basis points to 3.871%<\/strong>. The <strong>10-year Treasury note<\/strong> closed steady at <strong>4.356%<\/strong> after an initial decrease. In currency markets, the <strong>Dollar-Yen pair decreased by 0.8%<\/strong>, moving to <strong>149.60 from 150.51<\/strong>, reflecting a weakening dollar as rate cut expectations solidified.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways U.S. Nonfarm Payrolls in July significantly missed expectations, rising by only 73,000 against an estimated 104,000, and sharply 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