July 2025 Jobs Report: Just 73,000 Positions Added as Massive Revisions Reveal Labor Market Weakness

The July 2025 employment report delivered a stark reality check to the U.S. labor market, adding just 73,000 jobs, the weakest monthly gain since December 2020, while the unemployment rate ticked up to 4.2% from 4.1%. But the truly alarming story emerged from massive downward revisions to previous months: June was revised from 147,000 jobs down to just 14,000, and May was slashed from 144,000 to 19,000, a combined reduction of 258,000 positions, according to the Bureau of Labor Statistics report released August 1.

Healthcare accounted for nearly all job growth, adding 73,300 positions, while most other sectors stagnated or declined. Federal employment fell by another 10,000 jobs (bringing total cuts to 79,000 since January), manufacturing shed 11,000 positions, and professional services lost 14,000 jobs. Long-term unemployment surged to 1.82 million workers, the highest level in over three years.

The scale of the revisions fundamentally changes the narrative: June's initially reported 147,000 jobs, portrayed as a solid if modest gain, actually represented near-stagnation at just 14,000 positions. Combined with July's weak 73,000, the two-month total of 87,000 jobs represents the worst two-month stretch since the pandemic recovery ended.

The Headline Numbers: Weakness Across the Board

The July employment report revealed a labor market losing momentum across virtually every dimension:

• Jobs Added: 73,000 new nonfarm payroll positions (vs. 100,000-115,000 consensus estimate)
• Unemployment Rate: 4.2%, up from 4.1% in June
• Labor Force Participation Rate: 62.2%, down from 62.3% in June (down 0.5% from July 2024)
• Employment-Population Ratio: 59.6%, continuing decline
• Long-Term Unemployment: 1.82 million workers (unemployed 27+ weeks), up from 1.6 million in June
• Average Unemployment Duration: 24.1 weeks, highest since April 2022
• Average Hourly Earnings: $36.44, up 0.3% monthly, +3.9% year-over-year
• 12-Month Average: Job growth averaging just 124,000 (down from 168,000 in 2024)

Critical Revisions to Previous Months:

• May 2025: Revised from 144,000 to 19,000 jobs (down 125,000)
• June 2025: Revised from 147,000 to 14,000 jobs (down 133,000)
• Combined Revision: -258,000 jobs removed from previous estimates

The 73,000-job gain represents the weakest monthly performance outside of pandemic recovery periods in over four years. When combined with the revelation that June added just 14,000 positions, the labor market's trajectory appears significantly weaker than real-time data suggested.

The unemployment rate's increase to 4.2% marks the highest level since November 2024 and continues a gradual upward trend from the 4.0% rate seen earlier in 2025. While 4.2% remains historically low compared to pre-2020 norms, the direction of travel matters: rising unemployment combined with weakening job growth suggests a labor market in gradual deterioration rather than soft landing equilibrium.

Long-term unemployment's surge to 1.82 million, up 220,000 in just one month and 660,000 over three months, represents perhaps the most concerning indicator. When nearly 2 million workers remain unemployed for six months or more, and the average unemployment duration reaches 24.1 weeks (nearly six months), it signals fundamental difficulties in labor market matching and reemployment challenges that go beyond typical cyclical fluctuations.

The Revision Shock: June's 147,000 Jobs Were Actually 14,000

The combined 258,000-job downward revision to May and June fundamentally alters our understanding of spring 2025's labor market:

June's Dramatic Revision: The June employment report, released July 3, showed 147,000 jobs added with unemployment falling to 4.1%. Media coverage characterized it as "steady growth" and "resilient." With July's revisions, we now know June actually added just 14,000 jobs, a figure that would have triggered alarm bells about near-stagnation had it been reported in real-time.

14,000 jobs in a labor market of 159 million workers represents essentially no growth. For context, the U.S. economy typically needs 80,000-100,000 jobs monthly just to keep pace with population growth. June's 14,000 means the economy fell far short of even maintaining its current employment rate, let alone improving it.

May's Equally Severe Revision: May was revised from 144,000 to just 19,000 jobs, another near-stagnation figure masked by initial estimates. Between May's 19,000 and June's 14,000, the two-month total of 33,000 jobs represents the weakest two-month stretch of the entire 2025 calendar year before July's data.

Why Revisions Happen, And Why These Are Different: BLS preliminary employment estimates rely on survey responses that trickle in after the initial release. Late-reporting businesses, seasonal adjustment refinements, and sample size constraints mean first estimates require revision. Typical monthly revisions range from 10,000-30,000 jobs up or down.

May and June's combined 258,000-job downward revision is not typical. Revisions of this magnitude, averaging 129,000 per month, suggest either: (1) the economy weakened faster than survey samples captured, (2) businesses that typically respond promptly to surveys reduced their participation, or (3) seasonal adjustment models failed to capture changing employment patterns.

Regardless of cause, the scale of revisions erodes confidence in real-time employment data and suggests the labor market's weakness arrived earlier and more severely than acknowledged.

Historical Context: The largest monthly revisions in recent history occurred during the 2008 financial crisis and early pandemic, when economic conditions changed so rapidly that preliminary estimates couldn't capture the pace of deterioration. July 2025's revisions, while smaller in absolute terms, represent some of the largest outside crisis periods.

Sector-by-Sector Breakdown: Healthcare Carries Everything

Healthcare: +73,300 Jobs (100% of Net Growth)

Healthcare added 73,300 positions in July, accounting for more than the total nonfarm job gain, meaning without healthcare, the U.S. economy would have posted negative employment growth. For detailed sector-by-sector analysis, see our employment analytics. This extreme concentration represents the most healthcare-dependent monthly report of 2025:

• Hospitals: Added approximately 20,000 positions
• Ambulatory Healthcare Services: Gained 25,000 jobs across physician offices, outpatient centers, and specialty clinics
• Nursing and Residential Care: Added 15,000 positions
• Home Healthcare Services: Contributed 13,000 jobs

Healthcare's dominance reflects structural demographic drivers (aging population, chronic disease management) that continue regardless of broader economic conditions. However, the sector's extreme concentration of growth also highlights other sectors' struggles.

When one industry accounts for all net job creation, it signals an economy narrowing its growth base rather than broadening. If healthcare hiring were to slow, due to reimbursement pressures, staffing capacity constraints, or regulatory changes, the entire employment picture could turn negative quickly.

Social Assistance: +17,900 Jobs

Social assistance services added 17,900 positions, primarily in individual and family services (+12,000) and childcare (+4,000). This sector's continued growth reflects persistent demand for support services, though the pace has moderated from earlier 2025 when monthly gains typically exceeded 20,000.

Retail Trade: +15,700 Jobs

Retail added 15,700 jobs, with gains concentrated in general merchandise stores (+8,000) and specialty retailers (+5,000). However, this modest gain came after months of stagnation and job losses, suggesting retailers remain cautious about expanding workforces amid uncertain consumer spending.

Financial Activities: +15,000 Jobs

The financial sector added 15,000 positions, split between finance and insurance (+14,200) and real estate (+800). While positive, the gain represents a deceleration from stronger growth earlier in 2025 when financial firms were expanding to support increased merger activity and capital markets transactions.

Construction: +2,000 Jobs

Construction managed just 2,000 new jobs despite peak summer building season, a stark contrast to June's 15,000 and typical summer gains of 20,000-30,000. The weakness spans residential construction (essentially flat) and non-residential projects (+1,500). Elevated interest rates continue constraining housing starts, while commercial real estate challenges limit non-residential building.

Leisure and Hospitality: +5,000 Jobs

Leisure and hospitality added just 5,000 positions, remarkably weak for July, when summer tourism and entertainment typically drive gains of 30,000-50,000 jobs. The sector's weakness suggests either: (1) businesses already completed summer staffing in May-June, (2) consumer spending is softening, or (3) labor supply constraints limit hiring even when demand exists.

Food services and drinking places added 8,000 jobs, but accommodation (hotels, resorts) lost 2,000 positions, an unusual pattern for peak summer season that may indicate softer-than-expected travel demand.

Transportation and Warehousing: +3,600 Jobs

Transportation and warehousing added 3,600 jobs, continuing modest growth as e-commerce logistics demand remains stable. However, gains were concentrated in warehousing (+4,500), while trucking and transportation services remained essentially flat.

Professional and Business Services: -14,000 Jobs

Professional and business services shed 14,000 positions, led by administrative and support services (-19,800). Temporary help services lost another 8,000 jobs, continuing a trend that often foreshadows broader labor market weakness, as temp hiring typically serves as an early indicator of employer sentiment.

When businesses reduce temporary staff, it signals either: (1) reduced need for flexible capacity due to softening demand, or (2) conversion of temp workers to permanent status. Given broader labor market weakness, the former explanation appears more likely.

Manufacturing: -11,000 Jobs

Manufacturing lost 11,000 positions, with losses concentrated in nondurable goods (-11,000) while durable goods remained essentially flat. The sector continues facing headwinds from tariff uncertainties, strong dollar impacts on exports, and automation investments reducing labor intensity.

July marks the second consecutive month of manufacturing job losses after June's revised 7,000 decline, confirming a sector under significant pressure rather than experiencing one-time volatility.

Wholesale Trade: -7,800 Jobs

Wholesale trade shed 7,800 positions as distributors reduced staffing levels amid weaker demand signals. The sector's employment often moves in tandem with manufacturing and retail, suggesting challenges across the goods production and distribution chain.

Federal Government: -10,000 Jobs

Federal employment declined by another 10,000 positions, bringing total federal job losses since January 2025 to 79,000. This follows a broader pattern of workforce reductions visible in our companies database. The sustained workforce reduction represents a deliberate policy direction toward smaller federal employment, with cuts spanning multiple agencies and departments.

With 79,000 federal jobs eliminated in seven months, the pace shows no signs of slowing. The ongoing cuts continue creating ripple effects through government contractors, the Washington D.C. metro economy, and the broader federal ecosystem. Similar private sector layoffs have affected technology and manufacturing companies.

Long-Term Unemployment: A Growing Crisis

Long-term unemployment's surge to 1.82 million workers, those unemployed for 27 weeks or more, represents one of July's most alarming statistics. The 220,000-worker increase in a single month brings the total up 660,000 over just three months (from 1.16 million in April to 1.82 million in July).

This rapid acceleration in long-term unemployment signals fundamental challenges:

Reemployment Difficulty: When unemployment duration reaches 24.1 weeks on average, the highest since April 2022, it indicates workers are taking nearly six months to find new positions. This extended timeline suggests either: (1) available jobs don't match worker skills and locations, (2) employers are becoming increasingly selective, or (3) overall job openings have declined sufficiently that competition for available positions has intensified.

Skill Atrophy and Scarring: Workers unemployed for six months or more face compounding challenges. Professional skills atrophy without practice, industry knowledge becomes outdated, networks weaken, and employer bias against employment gaps intensifies. Research consistently shows long-term unemployment creates permanent "scarring" effects on lifetime earnings and career trajectories.

Financial Exhaustion: By six months of unemployment, savings deplete, unemployment benefits approach or exceed duration limits, and families face difficult decisions about housing, healthcare, and basic needs. The longer unemployment persists, the more likely workers accept positions below their skill levels or leave the workforce entirely.

Labor Market Signal: Rising long-term unemployment typically indicates a labor market where job openings are scarce relative to applicants. When 1.82 million workers remain unemployed despite extended searches, it suggests the labor market has moved beyond frictional unemployment (temporary job-to-job transitions) into a regime where insufficient demand leaves qualified workers sidelined.

The Federal Reserve closely monitors long-term unemployment as a key indicator of labor market health. The rapid increase in recent months provides mounting evidence that the labor market has moved beyond "soft landing" territory into genuine weakening.

Labor Force Participation: The Slow Decline Continues

The labor force participation rate's decline to 62.2%, down from 62.3% in June and 62.7% a year ago, continues a gradual erosion that removes hundreds of thousands of potential workers from the economy. Over the past 12 months, a 0.5 percentage point participation decline represents approximately 1.3 million individuals exiting the labor force.

This exodus can reflect several dynamics:

Discouraged Workers: The surge in long-term unemployment and extended job search durations push some workers to give up entirely. When job searches consistently fail to yield opportunities, workers stop actively seeking employment and drop out of labor force statistics.

Early Retirements: Older workers (55+) with adequate retirement savings may choose to exit the workforce rather than navigate a challenging job market. With significant numbers of Baby Boomers in their 60s and early 70s, early retirement represents an attractive option for those financially capable.

Caregiving Pressures: The high cost of childcare and elder care forces some workers, disproportionately women, to leave paid employment to provide unpaid family care. When professional care costs exceed potential wages, workforce exit becomes economically rational.

Education and Retraining: Some workers may be pursuing additional education or skills training, temporarily exiting the labor force with plans to return with enhanced credentials.

Health and Disability: Ongoing health challenges, including long COVID effects and chronic conditions, push some workers out of the workforce either temporarily or permanently.

Regardless of specific causes, declining participation reduces the economy's productive capacity, available tax base, and long-term growth potential. If prime-age workers (25-54) are leaving the workforce in significant numbers, it signals underlying economic weakness not captured by unemployment rates alone.

Wage Growth Accelerates Despite Weak Job Creation

Average hourly earnings increased 0.3% in July to $36.44, bringing year-over-year growth to 3.9%, an acceleration from June's 3.7% annual rate. This presents a puzzle: why would wages accelerate when job growth is collapsing and unemployment rising?

Several factors may explain the disconnect:

Compositional Effects: If job losses concentrate in lower-wage sectors while gains cluster in higher-wage healthcare and professional services, average wages rise even as total employment weakens. July's sector mix, losses in retail, leisure, and administrative services offset by healthcare gains, could produce this pattern.

Retained Worker Bargaining Power: Even as hiring slows, currently employed workers in critical roles may retain wage bargaining power, particularly in sectors facing acute labor shortages like healthcare. Wage growth for the employed can persist even as opportunities for job seekers deteriorate.

Scheduled Increases: Many wage increases result from scheduled union contracts, automatic annual adjustments, or minimum wage changes that occur regardless of real-time labor market conditions.

Measurement Timing: Wage data reflects actual paychecks of employed workers, while employment counts reflect headcount. Timing differences between when wages adjust and when employment responds can create temporary disconnects.

For workers currently employed, 3.9% wage growth continues to outpace inflation (running around 2.5-3.0%), providing modest real wage gains and purchasing power improvement. However, for the unemployed and those seeking work, wage statistics are irrelevant, the lack of employment opportunities dominates their economic reality.

For the Federal Reserve, the wage acceleration complicates policy decisions. While weakening employment argues for rate cuts, accelerating wages could signal inflationary pressures that argue for patience. The tension between these conflicting signals will shape upcoming policy debates.

What July Means for Job Seekers and Workers

The July employment report and associated revisions paint a challenging picture for job seekers and those considering career transitions:

The Stark Reality:

• Only 73,000 jobs added, weakest since pandemic recovery ended
• June actually added just 14,000 positions (not 147,000)
• Long-term unemployment surged to 1.82 million (24.1-week average duration)
• Labor force participation falling (62.2%, down 0.5% from a year ago)
• Federal employment cuts continuing (79,000 jobs lost since January)
• Manufacturing declining (11,000 jobs lost)
• Professional services weakening (14,000 jobs lost)
• Temporary help services shedding workers (8,000 jobs lost)

Limited Bright Spots:

• Healthcare adding 73,300 jobs (hospitals, nursing facilities, home health)
• Social assistance growing (17,900 positions)
• Financial services modestly positive (15,000 jobs)
• Retail showing marginal improvement (15,700 jobs)

For active job seekers, July's report suggests a labor market that has transitioned from challenging to genuinely difficult. Healthcare remains the primary opportunity sector, with hospitals actively hiring despite overall market weakness. Track specific companies' hiring patterns on our companies pages. Social assistance, financial services, and selective retail segments offer limited opportunities, but competition for available positions intensifies as more workers pursue fewer openings.

The surge in long-term unemployment to 1.82 million workers and 24.1-week average duration signals that job searches now take nearly six months on average. Candidates should prepare for extended timelines, increased competition, and heightened employer selectivity. Strategies that worked during the tight labor market of 2021-2023, frequent job-switching, leveraging multiple offers, no longer apply in an environment where opportunities are scarce.

For currently employed workers, July's data argues strongly for staying put. The era of leveraging tight labor markets for substantial raises through job-hopping has ended. Workers with stable positions in growing sectors (healthcare, certain professional services) should focus on strengthening their current roles rather than pursuing speculative opportunities.

Federal employees and contractors face continued uncertainty as workforce reductions show no signs of slowing. With 79,000 federal jobs lost in seven months, those in government-adjacent roles should prepare contingency plans and consider pivoting toward private sector opportunities in growing industries.

Economic Context: From Soft Landing to Hard Reality

July's employment report and massive revisions fundamentally challenge the "soft landing" narrative that dominated economic discussions through spring 2025. When June's initially reported 147,000 jobs are revised down to just 14,000, and July adds only 73,000, the picture shifts from gradual cooldown to genuine weakness.

Several factors continue shaping labor market dynamics:

Federal Reserve Policy Response: The July employment data prompted Fed Chair Jerome Powell to signal an imminent interest rate cut at the September 16-17 Federal Open Market Committee meeting. With unemployment rising to 4.2%, job creation collapsing to 73,000, and long-term unemployment surging, the Fed faces mounting pressure to ease monetary policy before labor market weakness cascades into broader economic contraction.

However, the Fed faces a complicated tradeoff: wage growth accelerating to 3.9% argues for patience, while employment weakness argues for urgency. The balance between these competing signals will determine whether the Fed cuts rates 25 basis points (cautious) or 50 basis points (aggressive) in September.

Tariff and Trade Policy Impact: Manufacturing's sustained job losses (-11,000 in July following -7,000 in June) reflect ongoing challenges from trade policy uncertainties and tariff impacts on input costs. Until businesses gain clarity on tariff structures and trade relationships, investment and hiring in trade-sensitive sectors will likely remain subdued.

Government Fiscal Policy: Federal workforce reductions totaling 79,000 jobs through July continue creating ripple effects through contractors, the D.C. metro economy, and the broader federal ecosystem. These deliberate cuts represent a sustained policy direction toward smaller federal employment rather than temporary adjustments.

Immigration Policy Effects: Tighter immigration policies reduce labor supply, particularly in sectors like construction, agriculture, healthcare support, and hospitality that historically rely on immigrant workers. When labor supply contracts while demand remains stable, it can contribute to wage growth (3.9% annually) even as overall employment weakens.

Political Pressure on Economic Data: The employment report's release triggered President Trump to dismiss Dr. Erika McEntarfer, Commissioner of Labor Statistics, and intensify pressure on the Federal Reserve to cut rates aggressively. This unprecedented political response to economic data raises concerns about the independence of statistical agencies and central bank policymaking.

JOLTS Data Reinforces Weakness

The Job Openings and Labor Turnover Survey (JOLTS) for July 2025, released September 3, showed job openings declining to 7.2 million from June's 7.4 million. The 200,000-opening decline reinforces the employment report's message of labor market cooling:

• Job Openings: 7.2 million (down from 7.4 million in June, 7.7 million in May)
• Hires: Approximately 5.1 million (continuing gradual decline)
• Openings-to-Unemployed Ratio: Now approximately 1.05 openings per unemployed person (down from 1.2+ earlier in 2025)

When job openings decline steadily, from 7.7 million in May to 7.2 million in July, while unemployment rises and long-term unemployment surges, it signals employer demand softening while labor supply remains abundant. The openings-to-unemployed ratio dropping below 1.1 suggests the labor market has moved from worker-favorable conditions (when ratio exceeded 2.0 in 2022) to near-balanced or employer-favorable territory.

Looking Ahead: Critical Questions for Late 2025

As the economy moves deeper into late summer and fall 2025, several factors will determine whether July represents a temporary soft patch or the beginning of more significant labor market deterioration:

August Employment Report (Released Sept 6): Will August show a rebound toward 150,000+ jobs, or confirm July's weakness with another sub-100,000 print? If August comes in below 100,000 jobs for a second consecutive month, recession concerns will intensify.

Federal Reserve September Decision: Will the Fed cut rates 25 basis points (cautious) or 50 basis points (aggressive)? The decision will signal policymakers' assessment of labor market risks and willingness to act preemptively versus waiting for additional data.

Long-Term Unemployment Trajectory: Will August show continued increases in long-term unemployment above 1.82 million, or has the surge peaked? If the 24.1-week average duration continues rising, it confirms fundamental reemployment challenges rather than temporary transitions.

Federal Workforce Cuts: Will the pace of federal job losses (79,000 through July) accelerate, stabilize, or begin reversing? The trajectory will significantly impact the D.C. economy and contractor employment.

Manufacturing Stabilization: Will manufacturing continue shedding jobs, or can trade policy clarity and cooling input costs stabilize the sector? Two consecutive months of losses (-7,000 in June, -11,000 in July) establish a concerning trend.

Revision Pattern: When August's report includes revisions to June and July, will they show further downward adjustments? If revisions continue understating weakness, it suggests economic data is lagging reality by months.

Conclusion: Weakness Confirmed, Questions Ahead

The July 2025 employment report showed the U.S. labor market adding just 73,000 jobs with unemployment rising to 4.2%, the weakest performance since pandemic recovery ended. But the truly significant story emerged from massive revisions: June was revised from 147,000 jobs down to just 14,000, and May was slashed from 144,000 to 19,000, removing 258,000 positions from previous estimates.

Healthcare accounted for all net job growth with 73,300 positions, while most other sectors stagnated or declined. Federal employment fell another 10,000 jobs (79,000 total since January), manufacturing shed 11,000 positions, and professional services lost 14,000 jobs. Long-term unemployment surged to 1.82 million workers (24.1-week average duration), while labor force participation declined to 62.2%.

The report's weakness prompted Federal Reserve Chair Jerome Powell to signal an imminent interest rate cut, acknowledging that labor market risks now warrant policy easing. However, wage growth's acceleration to 3.9% annually complicates the picture, creating tension between employment weakness that argues for aggressive cuts and wage pressure that counsels patience.

For workers and job seekers, July's report confirms a labor market that has transitioned from gradual cooling to genuine weakness. Healthcare offers the primary growth opportunities, while most other sectors struggle. Long-term unemployment's surge to 1.82 million workers and 24.1-week average duration signals that finding reemployment now takes nearly six months, requiring extended job search timelines and heightened competition for available positions.

The key question for the remainder of 2025 is whether July represents a temporary soft patch that will improve as the Fed cuts rates and economic conditions stabilize, or the beginning of more significant labor market deterioration that could threaten the broader expansion. August's employment report (released September 6) will provide critical evidence for distinguishing between these scenarios.

Data sources: U.S. Bureau of Labor Statistics Employment Situation Summary (released August 1, 2025) and Job Openings and Labor Turnover Survey (released September 3, 2025 for July data). All statistics represent preliminary data subject to revision in subsequent monthly reports.

Article Updates

August 1, 2025: Initial publication based on BLS Employment Situation report for July 2025. Report included significant downward revisions showing May revised from 144,000 to 19,000 jobs (-125,000) and June revised from 147,000 to 14,000 jobs (-133,000), a combined reduction of 258,000 positions.

September 3, 2025: Updated with JOLTS data for July 2025. Job openings declined by 200,000 to 7.2 million, continuing a downward trend from May's 7.7 million. The openings-to-unemployed ratio fell to approximately 1.05, signaling a shift from worker-favorable to near-balanced labor market conditions. The data reinforces the employment report's message of significant labor market cooling.