WASHINGTON, D.C. — The US jobs market cooled much more than expected in July with unemployment reaching its highest rate since 2021, government data showed on Friday, fueling calls for interest rate cuts as high levels bite.
The world's biggest economy added 114,000 jobs last month, down from June's revised 179,000 figure, said the Department of Labor.
The jobless rate rose to 4.3 percent, the highest since October 2021, according to government data.
"Today's report shows employment is growing more gradually at a time when inflation has declined significantly," said President Joe Biden in a statement.
But former president Donald Trump's campaign took aim at elevated costs of living and the rise in unemployment as he seeks another White House term, saying, "America's working families are hurting."
The report brings the Federal Reserve closer to its first rate cut after the pandemic with the economy cooling and inflation moving toward officials' 2-percent target.
But some economists caution the central bank may have to take stronger policy action in the coming months.
Wall Street stocks slid further into the red on Friday with the tech-heavy Nasdaq index dropping as much as 3 percent after the employment report.
While analysts have raised concern of the US economy triggering an early recession indicator, Oxford Economics chief US economist Ryan Sweet cautioned that "this cycle is unique."
In recent times, unemployment edged up as more people entered the labor force. This marks less of a risk that a vicious cycle of rising jobless rates leads to income loss and further employment cuts, he told Agence France-Presse (AFP).
In July, average hourly earnings rose less than analysts expected by 0.2 percent to $35.07, the Labor Department said.
On a year-on-year basis, wage growth slowed to a rate last seen in 2020.
Weak 'across the board'
"Job growth was weak across the board, with small gains or losses across the economy," said Mortgage Bankers Association chief economist Mike Fratantoni.
He added that the slowing in the market was consistent with trends elsewhere such as increases in initial claims for unemployment insurance and signs of contraction in manufacturing.
"Employment continued to trend up in health care, in construction, and in transportation and warehousing, while information lost jobs," said the Labor Department.
Government employment, which slowed in recent months, was little changed in July.
"There are signs that momentum is waning," said KPMG chief economist Diane Swonk about public sector hiring in a recent note.
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