The US labor market appeared to make steady progress during the first half of the year, but there are growing signs that job growth is losing momentum.

The July jobs report is set to be released at 8:30 a.m. Eastern Time on Friday and is expected to show a net gain of 115,000 jobs — a significant slowdown compared to June’s 147,000. The unemployment rate is also projected to rise to 4.2% from 4.1% the previous month, according to consensus estimates from FactSet.

Data from the US Bureau of Labor Statistics (BLS) shows the US economy added between 102,000 and 158,000 jobs monthly in the first half of the year. These figures are generally considered healthy and align with the so-called “break-even point” — where enough jobs are added to keep up with labor force growth and maintain unemployment stability.

However, excluding the pandemic-induced recession in 2020, the average monthly job gain of 130,000 from January to June is the weakest since 2010, when the US was still recovering from the Great Recession.

Heather Long, chief economist at Navy Federal Credit Union, told CNN: “We are increasingly relying on a very small part of the economy to generate any job growth. There just aren’t jobs right now — regardless of AI or tariffs.”

She added that hiring has weakened across most sectors, with businesses largely refraining from bringing on new workers due to uncertainty surrounding Trump’s volatile trade war and tariff policies.

Elizabeth Renter, chief economist at NerdWallet, wrote earlier this week: “When companies can’t predict the economy — and therefore their operations — they tend to wait until more clarity is available. In today’s environment, that predictive clarity changes week by week, keeping labor expansion stuck in limbo.”

Additionally, many workers are reluctant to switch jobs due to dim prospects, leading to a labor market characterized by stagnation in job mobility — rather than the “healthy churn” typically seen in a strong economy.

Latest Data Highlights Job Loss Trends

Recent federal data confirms this cooling trend. The Job Openings and Labor Turnover Survey (JOLTS) showed a drop in job vacancies in June, with the hiring rate falling to a one-year low. Meanwhile, the quits rate remained below its five-year average.

Other indicators suggest layoffs haven’t accelerated dramatically, despite a surge in layoff announcements this year — largely due to Trump administration cutbacks to federal agencies.

While initial jobless claims — a leading layoff indicator — remain low, continuing claims have stayed flat at 1.946 million, close to their highest level since November 2021.

The US Department of Labor reported Thursday that initial claims rose slightly to 218,000 last week, up from 217,000 the week prior, while continuing claims held steady near a four-year high.

Looking ahead, a report from Challenger, Gray & Christmas showed 62,075 job cuts were announced in July, up 29% from June.

Senior VP Andrew Challenger said: “We’re seeing the impact of federal budget cuts led by the Department of Government Efficiency on nonprofits, healthcare, and government sectors.” He added that AI was behind more than 10,000 layoffs last month, while tariff concerns impacted nearly 6,000 jobs this year.

Unemployment dipped in June, but that coincided with a shrinking labor force and a drop in participation rates.

The unemployment rate remains a key economic indicator, but due to major immigration-related shifts, its relevance has become more mathematical than meaningful.

A June analysis by Wells Fargo economists found that foreign-born workers — regardless of legal status — accounted for about three-quarters of the labor force growth since February 2020. Recent efforts to curb unauthorized immigration are now contributing to a contracting labor pool.

Healthcare and Education Lead Job Growth

While job growth often slows in summer or fiscal year-end periods, the US labor market also faces deeper structural challenges. Most job gains are concentrated in a few sectors.

Heather Long said: “The labor market is frozen outside of healthcare and education. That’s a real tragedy for anyone trying to get a job.”

The average duration of unemployment rose to 23 weeks in June, while the share of long-term unemployed (27 weeks or more) climbed to 23.3% — nearing a three-year high, according to BLS data.

In June, healthcare, social assistance, and state and local governments — which together account for less than 15% of total employment — contributed 94% of all new jobs, per BLS figures.

Economists also flagged possible distortions in local government job estimates for June (which showed an 80,000-job increase). Education jobs usually decline in summer, but this year’s dip was smaller, leading seasonal adjustments to register a sharp rise.

Healthcare, social services, and leisure and hospitality are expected to be the primary engines of job growth in July.

Meanwhile, the private-sector diffusion index — which measures the percentage of industries adding jobs — came in at 49.6 in June. A reading below 50 means more industries lost jobs than gained.

Return of a K-Shaped Economy

Although some tariff-induced price hikes have appeared online and in stores (and partly in inflation data), the bigger labor market impact has been the uncertainty they created.

In Heather Long’s view, tariff-related uncertainty tops the list of job market constraints, followed by post-pandemic rebalancing and — trailing distantly — the effect of artificial intelligence.

While wages continue to outpace inflation, recent developments have led the Federal Reserve to pause its tightening and pushed the economy back into a “K-shaped” pattern — where the poor struggle while a small wealthy minority drives growth.

“People are really hurting,” said Long. “And if the labor market weakens further, that could worsen existing strains like rising household debt.”

She concluded: “There’s simply no hiring — not for white-collar or blue-collar workers. Hopefully, this will change if we get clarity on tariffs by summer’s end and a rate cut in September.”

US stock indices declined on Friday as investors grew increasingly concerned about signs of a slowdown in the US labor market.

Government data revealed that the US economy added only 73,000 jobs in July, falling short of expectations for a gain of 100,000 jobs.

In addition, figures for May and June were sharply revised downward by a combined 258,000 jobs compared to initial estimates. June’s job gains were revised from 147,000 to just 14,000, while May’s figure was cut from 144,000 to 19,000.

The data also showed that the US unemployment rate rose to 4.2% in July from 4.1%, in line with market expectations.

As for market performance, the Dow Jones Industrial Average fell by 1.1% (or 445 points) to 32,671 as of 16:59 GMT. The broader S&P 500 dropped 1.2% (or 74 points) to 6,262, while the tech-heavy Nasdaq Composite declined 1.6% (or 340 points) to 20,777.

Copper prices in the United States stabilized on Friday after recording their largest daily drop ever the day before, as markets continued to assess President Donald Trump's surprise move to exempt refined copper from the 50% import tariff.

US copper futures for September delivery on the COMEX exchange rose by 1.1% to $4.4015 per pound, equivalent to $9,703.70 per metric ton, as of 10:06 a.m. GMT. This came after Thursday's sharp 22% plunge.

Meanwhile, benchmark three-month copper on the London Metal Exchange (LME) added 0.1% to $9,616 per ton.

Prices have come under pressure due to rising inventories at LME-registered warehouses, along with expectations of further flows from large US stockpiles following Washington’s decision to exclude refined copper from import tariffs.

Copper inventories in COMEX warehouses currently stand at 257,915 short tons (equivalent to 233,977 metric tons), the highest level in 21 years, after surging by 176% between March and July.

At the same time, available inventories at the LME doubled during July to reach a three-month high of 127,475 metric tons.

However, the likelihood of large US inventory flows entering the global market in the short term remains limited, due to the continued premium of COMEX copper contracts over LME prices, despite recent declines.

A metals market trader stated, “The COMEX premium on copper has now shrunk to just a few hundred dollars, which is still historically large, but pales in comparison to the $3,000 premium seen recently.”

On another note, a private-sector survey showed a drop in Chinese factory activity during July, adding further pressure to copper prices. Copper is widely used in the energy and construction sectors.

China — the world’s largest metal consumer — faces an August 12 deadline to reach a permanent tariff agreement with the Trump administration.

Trump had previously imposed steep tariffs on exports from dozens of trading partners, including Canada, Brazil, India, and Taiwan, ahead of Friday’s trade agreement deadline.

As for other metals traded on the LME, aluminum fell by 0.5% to $2,552 per ton, zinc dropped 1.4% to $2,723, lead declined 0.2% to $1,965.50, tin rose 1.1% to $32,970, and nickel slipped 0.5% to $14,855.

Bitcoin declined on Friday, capping a week of losses amid profit-taking in cryptocurrency markets, as concerns over US tariffs and rising interest rates continued to weigh on investor sentiment.

Markets are now focused on upcoming US non-farm payrolls data, which could offer further clues about the state of the American economy.

Bitcoin fell 2.5% to $115,540.9 as of 00:45 Eastern Time (05:45 GMT). The world’s largest cryptocurrency is poised to end the week with losses of nearly 2%, having failed to maintain the momentum that pushed it to record highs in mid-July.

A major purchase by Strategy — one of the largest institutional holders of Bitcoin — did little to boost prices this week. Although the company posted stronger-than-expected quarterly earnings for the June period, its stock showed little reaction.

Bitcoin drops as risk appetite weakens amid US trade policy concerns

Friday’s decline came after US President Donald Trump signed an executive order on Thursday imposing tariffs on a group of American trading partners. The tariffs are set to take effect in seven days, following the previously set August 1 deadline.

Markets are still awaiting further clarity on the tariff details, especially after Washington reached several last-minute trade agreements with major global economies.

Trump’s trade policy remains a key source of uncertainty for the Federal Reserve, which indicated this week that it would hold off on changing interest rates until the impact of the new tariffs on inflation becomes clearer.

The Fed’s comments weighed on risk appetite this week, which in turn pressured cryptocurrency markets.

While tariffs do not directly affect cryptocurrencies, they dampen overall investor sentiment, which negatively impacts speculative assets like Bitcoin.

In contrast, persistently high interest rates pose a more direct threat to Bitcoin, as they reduce the appeal of high-risk investments.

Crypto prices: Altcoins slump ahead of US jobs data

Prices of alternative cryptocurrencies (altcoins) fell sharply on Friday and are on track for steep weekly losses, amid broad profit-taking and declining demand for high-risk assets.

Anticipation ahead of US non-farm payrolls data is adding further pressure to the market, as the figures are likely to influence the Federal Reserve’s future decisions on interest rates. If the data shows continued labor market strength, the Fed would have less incentive to lower rates in the near term.