July’s heat may not have extended to the U.S. job market.
The Bureau of Labor Statistics is scheduled to release its nonfarm payroll report for last month at 8:30 a.m. ET. It’s projected to show a modest pickup in hiring, albeit with stagnant wages.
Economists surveyed by Dow Jones expect the release to show 83,000 added roles, more than June’s 57,000. The unemployment rate should remain steady at 4.2%, according to those economists.
The hiring data comes against a complicated economic backdrop. The U.S. war with Iran continues without any kind of agreement to fully reopen the Strait of Hormuz. As a result, energy prices remain elevated, even if they are off their highest levels of the year. The average price of regular gasoline also remains high, at $4.06 per gallon, up 36% since Feb. 28. Inflation remains well above the Federal Reserve’s 2% target at 3.5%. Wages are struggling to keep pace.
“Average hourly earnings are expected to rise 0.3%, which will boost wages 3.5% from a year ago,” said Diane Swonk, chief economist at accounting and finance firm KPMG. “That is the same as June and suggests that the cooling we had seen in wages may be hitting a trough.”
“The challenge is inflation,” Swonk said, “which after a brief reprieve in June, accelerated again in response to the conflict in the Middle East.”
Wage growth has gradually weakened over the past few years, and it fell below the rate of inflation in April and May due to the Iran war. Energy prices have pulled back since then.
Swonk expects an above-consensus 100,000 jobs. “The good news is that firms are beginning to loosen their purse strings and hire again,” she wrote.
Bank of America economist Shruti Mishra, who projects that 80,000 jobs were added, wrote that “a report in line with our forecast would signal a healthy labor market.”
“Looking into the details, education and health services should again lead job gains,” Mishra added. Those sectors accounted for most of the labor market’s growth last year. However, Mishra said that labor market growth could actually be “somewhat broader in July.”
“Leisure & hospitality could post a modest rebound after June’s 61k decline, which was likely driven by seasonal distortions,” Mishra wrote. Economists often point to leisure-and-hospitality hiring trends as a signal about the health of consumer spending.
Swonk also agreed that an upswing in leisure-sector hiring would not be a surprise. She also flagged professional and business services as an area of potential gains. Swonk said that sector was “starting to play a larger role in supporting overall employment gains” due to the hiring of “accountants, lawyers and temporary help services.”
Additionally, recent manufacturing survey data showed that employers in that sector increased hiring for the first time since September 2023. That data also showed that factory activity rose by the most since 2022.
“After steady job losses between 2023 and 2025 (industry employment down by more than 300,000), manufacturing employment has increased in four of the six months so far this year,” wrote Gus Faucher, chief economist of PNC Financial Services Group. “The gain is small — just 18,000 in 2026 — but is definitely moving in the right direction.”
Faucher said that PNC is forecasting “modest manufacturing job growth throughout 2026 given the turnaround in activity this year, including strong AI-related demand and some onshoring in the wake of tariffs.”
Two weeks ago, the Trump administration laid out a wave of new tariffs on 60 economies. Twenty-five states sued to stop them on Tuesday.
Faucher said that the “labor market is solid” this year “and is better than it was last year.” He also pointed to the broadening breadth of job growth across sectors. “Last year employment outside of health care fell; this year health care has accounted for only about 11% of total job growth,” he wrote.
A positive jobs report would be likely to set the stage for a Fed rate hike, potentially as soon as September, as it could reinforce inflation as the bigger issue. Fed Chair Kevin Warsh has stressed that the central bank is heavily focused on price stability — in other words, ensuring that inflation returns to 2%. Already, the futures market shows a more than 50% chance of a September rate hike.
However, not every economist is so convinced that Friday’s report will be that positive. Vanguard senior economist Adam Schickling is forecasting just 18,000 jobs, well below the consensus.
Vanguard’s own data, which is based on 401(k) retirement plans that it runs for thousands of companies and about 5 million workers, showed “near-zero employment growth in July,” he said. When that data is scaled to the entire U.S. labor market, it translates into the addition of roughly 9,000 jobs.
