US economy added just 114,000 jobs last month and unemployment rose to 4.3%

By Alicia Wallace, CNN

(CNN) — The US labor market cooled off far more than expected last month, underscoring concerns that the economy has slowed down too quickly and could lead to a recession.

Businesses added just 114,000 jobs in July, according to Bureau of Labor Statistics data released Friday and the unemployment rate unexpectedly leapt to 4.3%, which is the highest since October 2021.

That’s a significantly lower total than the 175,000 that economists were expecting. The unemployment rate was forecast to remain at 4.1%.

The unexpectedly weak July jobs report — which also showed that both May’s and June’s estimated gains were revised lower — raises fears that the labor market is not cooling gradually to pre-pandemic levels but weakening outright.

Friday’s report also is raising questions of the Federal Reserve, which has become more attuned to potential weakness in the labor market, but opted to hold interest rates steady on Wednesday. These latest numbers now cast doubt as to whether the jobs market has enough gas in the tank left to stay on cruise control until the first cut is made, which is all-but-certain to occur in September.

“Oh dear, has the Fed made a policy mistake?” Seema Shah, chief global strategist for Principal Asset Management, wrote Friday in commentary. “The labor market’s slowdown is now materializing with more clarity. Job gains have dropped below the 150,000 threshold that would be considered consistent with a solid economy.”

The health care and social assistance industry continued to lead the job growth last month — accounting for more than half of the monthly gains by adding 64,000 jobs. Construction (+25,000), leisure and hospitality (+23,000), and government (+17,000), saw the next-highest gains; however, job creation across other industries was languid.

While the US labor market remains in a historic period of expansion — July marks the 43rd consecutive month of job growth, the fifth-longest on record — much of the gains seen in the past two years have not been broad-based, heightening concerns among labor economists.

This story is developing and will be updated.

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