US job growth slowed more than expected in July, while the unemployment rate rose to 4.3%, which may raise concerns that the labor market is deteriorating and potentially leaving the economy vulnerable to recession.
Nonfarm payrolls rose by 114,000 jobs last month after a downwardly revised 179,000 job gain in June, the Labor Department's Bureau of Labor Statistics reported in a closely watched jobs report on Friday.
Economists polled by Reuters had forecast employment would rise by 175,000 jobs after a previously reported increase of 206,000 in June. Estimates range from 70,000 to 225,000.
Hurricane Beryl, which caused power outages in Texas and hit parts of Louisiana during the week of the payroll survey, likely contributed to the below-expected job gains.
The labor market is slowing, driven by low hiring, rather than layoffs, as Federal Reserve interest rate hikes in 2022 and 2023 dampen demand. Government data this week showed hiring fell to a four-year low in June.
Average hourly earnings rose 0.2% last month after rising 0.3% in June. In the 12 months to July, employment rose 3.6%. That was the smallest annual increase since May 2021 and followed a 3.8% increase in June.
Although job growth remained above the 3%-3.5% range seen as consistent with the Fed's 2% inflation target, it extended the inflation-friendly data. The jobs report confirmed the case for a rate cut in September from the US central bank.
The unemployment rate rose from 4.1% in June marking the fourth consecutive monthly increase. That could raise concerns about the durability of the economic expansion.
