US non-farm payrolls came in at 73k (Reuters consensus: +110k) in July, versus 14k (previously: +147k) in June and a 10-year average monthly increase of around 180k, taken from up to the end of 2019 before the pandemic distorted the data.
Daniel Casali, Chief Investment Strategy at Evelyn Partners, the UK wealth manager, commented:
“While the headline non-farm payroll number was less than the consensus expected and the previous month was revised down substantially, the key takeaway from the report is that firms are still hiring. There are multiple reasons for this.
“First, while there are concerns over the impact of higher trade tariffs on US economic growth, consumers are still spending money, as jobs are being created. This has reduced the risk of a downturn in the economy. According to economists surveyed by Bloomberg, the probability of a recession in the next 12 months stands at 35%, down from 40% after the tariff shock in April. A lower chance of a recession should provide businesses with confidence to take on more staff.
“Second, labour costs are relatively cheap. For instance, the share of US labour compensation in GDP was around 52% in the first quarter of 2025, down from a cyclical peak of 58% in 2001, the year that China joined the World Trade Organisation. By integrating China into the global economy as a manufacturing hub, the increased supply of labour dampened workers’ wage demands in the West.
“Furthermore, advances in telecommunications have allowed companies to redistribute service-sector jobs to areas with higher unemployment and lower wages. Job search platforms like LinkedIn have also improved the efficiency of matching applicants with vacancies, reducing frictional unemployment costs.
“Third, there is still a demand-supply gap dating back to the Covid pandemic that has yet to close. This was when workers left jobs and have not yet been replaced. US demand for available workers (employed plus job openings) is still running more than 150k higher than the supply of workers (employed plus unemployed).
“The flexibility of the US labour market enables it to adjust to headwinds, including trade tariffs and policy shifts. These include Trump administration’s crackdown on net immigration and the federal government hiring freeze, which has been extended from 15 July to 15 October.
Bottom line:
US employment is growing sufficiently to support consumer demand and economic growth. This creates a constructive backdrop for company earnings and stocks.
