Unemployment Rises To 4.2 Percent In July as Hiring Falls Sharply

August 1, 2025 – Employment rose by 73,000 in July as the U.S. unemployment rate stands at 4.2 percent, according to the most recent U.S. Bureau of Labor Statistics report, while the nonfarm payrolls count for the prior two months was revised down by a massive 258,000 jobs. Employment continued to trend up in healthcare and in social assistance. Federal government continued to lose jobs. The number of unemployed people, at 7.2 million, changed little over the month. According to Forbes, an average of 130,000 jobs added per month this year is the weakest since the January to June period in 2010, as the U.S. economy recovered from the Great Recession. An average of 168,000 jobs were added per month last year, compared to the roughly 400,000-per-month average from 2021 through 2023 as businesses recovered from COVID-19 lockdowns.

Among the major worker groups, the unemployment rates for adult men (4.0 percent), adult women (3.7 percent), teenagers (15.2 percent), Whites (3.7 percent), Blacks (7.2 percent), Asians  (3.9 percent), and Hispanics (5.0 percent) showed little change in July.

Among the unemployed, the number of new entrants increased by 275,000 in July to 985,000. New  entrants are unemployed people who are looking for their first job. In July, the number of long-term unemployed (those jobless for 27 weeks or more) increased by 179,000 to 1.8 million. The long-term unemployed accounted for 24.9 percent of all unemployed people.

The labor force participation rate, at 62.2 percent, changed little in July but has declined by 0.5 percentage point over the year. The employment-population ratio, at 59.6 percent, also changed little over the month but was down by 0.4 percentage point over the year. The number of people employed part time for economic reasons, at 4.7 million, changed little in July. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs.

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The number of people not in the labor force who currently want a job changed little in July at 6.2 million but was up by 568,000 over the year. These individuals were not counted as unemployed because they were not actively looking for work during the four weeks preceding the survey or were unavailable to take a job.

Where Job Growth Occurred

• In July, healthcare added 55,000 jobs, above the average monthly gain of 42,000 over the prior 12 months. Over the month, job gains occurred in ambulatory healthcare services (+34,000) and hospitals (+16,000).

• Social assistance employment continued to trend up in July (+18,000), reflecting continued job growth in individual and family services (+21,000).
• Federal government employment continued to decline in July (-12,000) and is down by 84,000 since reaching a peak in January. (Employees on paid leave or receiving ongoing severance pay are counted as employed in the establishment survey.)
• Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; retail trade; transportation and warehousing; information; financial activities; professional and business services; leisure and hospitality; and other services.

The Private Sector

Private sector employment increased by 104,000 jobs in July and pay was up 4.4 percent year-over-year according to the July ADP National Employment Report produced by ADP Research in collaboration with the Stanford Digital Economy Lab. The ADP National Employment Report is an independent measure and high-frequency view of the private-sector labor market based on actual, anonymized payroll data of more than 25 million U.S. employees. The figure came in well above economist forecasts for an increase of 65,000, according to a Dow Jones consensus.

“Our hiring and pay data are broadly indicative of a healthy economy,” said Dr. Nela Richardson, chief economist, ADP. “Employers have grown more optimistic that consumers, the backbone of the economy, will remain resilient.”

Friday’s data follows a report earlier this week from the career services firm Challenger, Gray & Christmas, which noted private and public employers cut 62,000 jobs in July, marking a 140 percent spike over July 2024 after the Department of Government Efficiency slashed federal agencies and grants, and as more companies implemented AI.

It’s not immediately clear whether Trump’s tariffs have directly affected the number of jobs available, though retail and automotive sectors have recorded an increase in layoffs. The retail market cut nearly 80,500 jobs in July, a year-over-year increase of 249 percent, according to the Challenger report, as companies cited tariffs, inflation and economic uncertainty.

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Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor  – Hunt Scanlon Media