US hiring slowdown: Economy likely added 115,000 jobs in July trailing last year's pace; grads, young workers hit hardest

The US labour market is showing signs of gradual weakening, with job growth slowing even as widespread layoffs and overall unemployment stays low, according to the Assoicated Press report.

Recent graduates are among the worst affected. The jobless rate for Americans aged 22–27 with a university degree rose to 5.8 per cent in March—its highest non-pandemic level since 2012—well above the national average. Meanwhile, workers more broadly appear hesitant to switch jobs, with many believing the current market reflects peak employment opportunities.

That perception is gaining weight as hiring momentum wanes across most sectors, marking a sharp reversal from the post-pandemic surge when employers wooed talent with signing bonuses, flexible schedules, and even pet insurance.

The latest US Labor Department employment report, due Friday (US time), is expected to show a gain of 115,000 new jobs in July, according to a FactSet survey of analysts. Though not weak, this would trail both June’s 147,000 additions and last year’s monthly trend. So far in 2024, the economy has added an average of 130,000 jobs per month- down 23 per cent from 2023 and 68 per cent below the 2021–2023 recovery period.

Economists say several forces are driving this cooling: the Federal Reserve’s high interest rates to curb inflation, President Donald Trump’s newly reinstated import tariffs, and fears of declining international labour supply under looming deportation plans.

“The labour market is poised for a summer slowdown as businesses put hiring plans on hold but refrain from broad-based layoffs,” Gregory Daco, chief economist at EY-Parthenon, wrote this week, quoted by AP. “We see job growth slowing well below trend in the coming months.”

Despite this, job security remains relatively strong. The national unemployment rate stands at 4.1 per cent, while unemployment benefit applications remain in a normal range.

But that headline figure masks disparities. “A low unemployment rate and a muted pace of layoffs mask underlying weakness,” said Adam Schickling, senior economist at Vanguard. “The health of the job market can be a matter of perspective. If you're a nurse, prospects are excellent—the unemployment rate for experienced health care practitioners is under 2 per cent. But for young people or older workers re-entering the market, opportunities may appear scarce.”

The voluntary resignation rate—a key sign of worker confidence—has also dropped below pre-pandemic levels.

Employment growth is now largely confined to a few sectors. Of the 644,000 private-sector jobs added in 2024, around 405,000- over 63 per cent- have come from healthcare and social assistance alone.

Young entrants and returning workers are struggling most amid fewer openings and longer job hunts. The number of discouraged workers—those who have stopped looking because they believe no jobs are available- rose by 256,000 in June to 637,000, according to the Labor Department.

“Historically, a drop in hiring has come with a spike in layoffs, a one-two punch that pushes up unemployment,” said Schickling. “Today’s labour market is defying that pattern.”

Part of the explanation lies in the shrinking role of manufacturing, where companies once made sweeping headcount cuts. “There’s simply less headcount to cut,” he added.

Ultimately, the job market appears to be softening—not collapsing. “Firms are pulling back on hiring without shedding existing workers in significant numbers,” Schickling noted. “The result is a gradual slowdown, not a sharp downturn.”