The U.S. unemployment rate increased by 0.2 percentage points to 4.3% in July, the highest level since October 2021, according to data released Friday by the U.S. Bureau of Labor Statistics.
Employers added 114,000 jobs in July, a slowdown compared to the downwardly revised 179,000 hired in June. Hiring saw increases in healthcare, construction, and transportation and warehousing sectors during July, while the information sector experienced job losses.
Healthcare added 55,000 jobs in July, slightly below the average monthly gain of 63,000 over the previous year. Employment rose notably in home healthcare services (+22,000), hospitals (+20,000), and nursing and residential care facilities (+9,000).
Construction employment continued its upward trend with an addition of 25,000 jobs in July, consistent with the average monthly gain of 19,000 over the prior year. Specialty trade contractors saw an increase of 19,000 jobs.
Employment also rose in transportation and warehousing (+14,000). Social assistance employment continued its upward trend with a slower pace of growth at +9,000 jobs compared to an average monthly gain of +23,000 over the past year.
The information sector saw a decline of 20,000 jobs in July but has remained relatively stable over the year.
Government employment showed little change with an addition of +17,000 jobs. Government hiring has decelerated recently after larger gains were recorded in 2023 and early 2024. Other major industries such as manufacturing; wholesale trade; retail trade; financial activities; professional and business services; and leisure and hospitality saw little change.
Average hourly earnings for all employees on private payrolls increased by eight cents or 0.2% to $35.07 in July. Over the past year, average hourly earnings have risen by 3.6%.
While the current unemployment rate is not high by historical standards—far from the peak of 14.8% seen during April 2020—the recent rise has sparked concerns about a potential recession.
Named after economist Claudia Sahm's theory known as "the Sahm Rule," it posits that if there is a rise of at least half a percentage point (0.50) in the three-month moving average unemployment rate relative to its lowest point over the previous twelve months—a recession may be imminent.
The full July Employment Situation Report is available for further details.
