The US jobs report for July 2025 revealed an increase in non-farm payrolls by 73,000. This figure is much lower than the expected 110,000. Notable adjustments were made to the previous month’s data, which was revised from 147,000 down to just 14,000. The total monthly payroll revision was a decrease of 258,000. Private payrolls rose by 83,000, despite an estimate of 100,000, and the previous figure was adjusted to 3,000. Manufacturing payrolls fell by 11,000, compared to an estimated drop of 3,000, while last month’s numbers were revised down to -15,000. Government payrolls also declined by 10,000 after an earlier revision from 73,000 up to 11,000. The unemployment rate remained at 4.2%. Average earnings saw a 0.3% increase from the previous month and a 3.9% increase year-on-year, meeting expectations. The average workweek was 34.3 hours, slightly above what was estimated. The labour force participation rate stood at 62.2%, while underemployment rose to 7.9% from 7.7%. In reaction to the report, US stocks, including the S&P and Nasdaq, fell, along with yields and the USD. The S&P dropped by 53 points, and the Nasdaq fell by 243 points. The probability of a rate cut in September and December is now 75% and 72%, respectively, as a result of the weaker data.

Impact Of Job Report Revisions

Today’s jobs report is significant, not just for the headline number. The drastic reduction of last month’s data from 147,000 to only 14,000 jobs is the key takeaway. This change reveals a much bleaker view of the economy than we had just a day ago. Since Fed Chair Powell indicated he needed two months of data before the September meeting, this report provides that insight in one fell swoop. Given the last inflation report, which showed CPI cooling to 2.8%, the Fed clearly has a reason to act. The market is responding, now pricing in a 75% chance of a rate cut at the September 17 meeting. The 2-year Treasury yield has plummeted over 16 basis points to 3.788%. This signals a shift towards trades that benefit from lower interest rates. Consider taking long positions in interest rate futures or buying call options on Treasury bond ETFs in the coming weeks.

Reaction Of Stocks And The US Dollar

The stock market’s recent drop indicates fears of a potential recession, which this data supports. We anticipate increased volatility as the Fed’s September decision approaches, with the VIX surging over 30% today to trade above 19. Buying puts on indices like the S&P 500 or Nasdaq 100 could serve as a useful hedge against further economic concerns. A weaker US dollar is likely, as lower interest rates diminish its attractiveness to foreign investors. This trend is expected to continue as the market strengthens its bets on a Fed rate cut. Shorting the dollar against currencies like the euro or yen can be a direct strategy to capitalize on this. We’ve seen similar patterns before, especially leading up to 2008. Significant downward revisions of payroll numbers were early indicators of a weakened labor market. Today’s revisions should be viewed as a serious warning of a potential economic slowdown. The report highlights widespread weakness, with job losses in manufacturing and professional services. Aside from the strong healthcare sector, the private sector is struggling, which aligns with recent data showing retail sales declining for three consecutive months. This suggests that the US consumer, the backbone of the economy, is finally losing momentum. Create your live VT Markets account and start trading now.

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