July jobs report expected to show hiring dwindled as labor market cools off


Strong jobs report reflection of where economy was pre-pandemic: Eugene Scalia

Former Trump labor secretary analyzes the June jobs report and the state of the economy on “Cavuto: Coast to Coast.”

U.S. job growth likely cooled off in July, suggesting that headwinds from the highest inflation in four decades and rising interest rates are starting to weigh on the labor market.

The Labor Department on Friday morning is releasing its closely watched July jobs report, which is projected to show that payrolls increased by 250,000 last month and the unemployment rate held steady at 3.6%, according to a median estimate by Refinitiv economists. 

That would mark the worst month for job creation since December 2020, when the economy shed 115,000 positions. 

Wall Street and Washington are eagerly awaiting the latest employment data amid signs of an impending economic slowdown. 


A separate government report last week showed that GDP, the broadest measure of goods and services produced across the economy, shrank by 0.9% on an annualized basis in the three-month period from April through June. Economic output already fell over the year's first three months, with GDP tumbling 1.6%.

With back-to-back declines in growth, the economy meets the technical criteria for a recession, which requires a "significant decline in economic activity that is spread across the economy and that lasts more than a few months." (The National Bureau of Economic Research — the semi-official arbiter — typically waits up to a year to confirm recessions).

The labor market has remained one of the few bright spots in the economy for months, but there are signs that it is starting to weaken: Jobless claims are steadily edging higher and a plethora of companies, including Alphabet's Google, Walmart, Apple, Meta, Robinhood and Microsoft, have announced hiring freezes or layoffs in recent weeks.

Friday's report could shed light on the health of the jobs market as consumers confront record-high inflation and increasingly steep borrowing costs.


A “help wanted” sign is displayed in a window in Manhattan, July 28, 2022, in New York City. (Spencer Platt/Getty Images / Getty Images)

"A recession isn’t guaranteed at this point, but it’s looking more likely than not," said Bill Adams, chief economist for the Dallas-based Comerica Bank. "There are just too many headwinds to the U.S. economy."

Companies are in a precarious position as they confront an increasingly hazy economic outlook: The Federal Reserve is raising interest rates at the fastest pace in decades, growth is slowing and inflation is still rampant. 

Central bank policymakers already approved four consecutive interest rate hikes, including back-to-back 75-basis point increases, and have signaled that more are on the table in the coming months as they look for signs that consumer demand is cooling off. A stronger-than-expected report could force the Fed to move even quicker to tame inflation.

The Fed's increasingly hawkish stance will likely create new burdens for businesses. Hiking interest rates tends to create higher rates on consumer and business loans, which slows the economy by forcing employers to cut back on spending.

Fed Chairman Jerome Powell has said that policymakers are laser-focused on bringing inflation down, even if it means that unemployment climbs higher. While he has maintained that the U.S. is not currently in a recession, he has suggested that achieving a soft landing is an increasingly difficult feat.


"We think it’s necessary to have growth slow down, and growth is going to be slowing this year," Powell told reporters last week.

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