U.S. Job Growth Slows in July Amid Rising Unemployment

U.S. job growth slowed significantly in July, with nonfarm payrolls increasing by only 114,000 jobs. The unemployment rate rose to 4.3%, sparking concerns about a potential recession. Factors include Hurricane Beryl and the Federal Reserve's interest rate hikes. Wage growth also slowed, influencing inflation expectations.

U.S. job growth in July was weaker than anticipated, with nonfarm payrolls increasing by just 114,000 jobs. This comes after a downwardly revised 179,000 increase in June, according to the Labor Department's Bureau of Labor Statistics. The unemployment rate climbed to 4.3%, fueling fears of an economic slowdown.

Economists initially predicted a payroll gain of 175,000, but the actual number fell short due to factors like Hurricane Beryl impacting Texas and Louisiana. The labor market's deceleration is primarily due to reduced hiring, influenced by the Federal Reserve's interest rate hikes in 2022 and 2023, which have curbed demand.

Additionally, average hourly earnings rose by 0.2% in July, marking a year-on-year wage growth of 3.6%, the smallest increase since May 2021. This data bolstered the likelihood of a September rate cut from the Federal Reserve, yet escalating unemployment rates heighten concerns about the economy's resilience.

(With inputs from agencies.)