Employers pull back on hiring; Construction spending drops; Federal Reserve governor resigns

The United States added a lower-than-expected 73,000 jobs in July as uncertainty over the future course of tariffs and inflation weighed on hiring plans, the Labor Department reported Friday.

The department's Bureau of Labor Statistics also cut the number of jobs added in recent months. May’s jobs figure was sharply revised down to 19,000 from the previously announced 144,000 jobs, and June was reduced to 14,000 from 147,000, for a combined 258,000 fewer jobs than previously reported.

The U.S. unemployment rate rose to 4.2% in July from 4.1% the previous month, according to the Labor Department.

President Donald Trump on Friday called for the removal of Erika McEntarfer, the director of the bureau that produces the monthly jobs figures, claiming in a post on his social media platform that the data was manipulated for political reasons.

"Hiring has hit a wall in the U.S.," according to an analysis of the data written by Bankrate senior economic analyst Mark Hamrick. "Substantial downward revisions in payrolls means that private sector hiring has averaged a little more than 50,000 jobs over the past three months.”

Healthcare and social assistance led employment growth, adding a combined 73,300 jobs in July. The federal government lost 12,000 jobs in July for a total of 84,000 since January, mainly because of workforce cuts made by the Trump administration. Manufacturing and the administrative and support services sector also saw declines in July.

U.S. spending on residential and nonresidential construction declined in June as project developers remained cautious at a time of higher mortgage rates and elevated costs for materials.

The Commerce Department's Census Bureau said on Friday that June's total construction spending fell 0.4% to a seasonally adjusted rate of $2.14 trillion, down 2.9% from a year earlier.

Private nonresidential spending was down 0.3% in June from the prior month. Most categories posted monthly declines, with the largest drop in office construction, which fell 1.4%.

"Nonresidential construction spending declined in June and has now contracted in six of the past seven months,” said Anirban Basu, chief economist with the Associated Builders and Contractors trade group. "Recent data pertaining to both the construction industry and the broader economy suggest weakness could persist in the months to come.”

Private residential construction spending dropped 0.7% from the prior month — marking the sixth straight month of decreases — and declined 6.2% from a year earlier.

A member of the Federal Reserve's board of governors announced Friday that she plans to resign from her post on Aug. 8.

Adriana Kugler, who was appointed to the Fed board by former President Biden in 2023, will leave the central bank six months before the end of her term.

The early vacancy gives President Donald Trump an opportunity to appoint a favored candidate ahead of schedule. The president has been critical of Fed Chairman Jerome Powell, calling for interest rate cuts to stimulate economic growth. The White House has been considering candidates to replace Powell once the chairman's term ends next May.

“I am especially honored to have served during a critical time in achieving our dual mandate of bringing down prices and keeping a strong and resilient labor market," Kugler said in a statement Friday, adding that she plans to return to Georgetown University as a professor.

Kugler did not provide a reason for her early departure in the statement released by the central bank.