How the latest US jobs report signals impending economic distress in 5 points

Negative data for the first time since 2020

The report showed that the US lost 13,000 jobs in June, marking the first time it went into the negative since December 2020, when Covid was well underway.

The BLS revised its previous estimates of June data, which reported an addition of 139,000 jobs to the US economy. The latest report indicates that the actual addition for that month was -13,000, meaning it had lost jobs during the period. Similar revisions for July’s jobs data saw an actual increase from 73,000 to 79,000.

The bureau attributed the revisions to a double-counting of data as it received additional reports from employers, mainly business and government agencies. Economists have further attributed these revisions to the “birth and death” model used by the BLS to estimate the net additions to jobs due to companies opening or closing in a particular month.

In August, Trump fired Erika McEntarfer, the bureau chief, and claimed the numbers were “rigged” to make him look bad.

How different sectors performed

Sectors including information, financial activities, federal government and business services, posted outright declines.

In contrast, job additions were made in healthcare, leisure and hospitality industries. However, these sectors may also face the risk of hiring slowdowns, even as the Trump administration pursues Medicaid cuts and reduced social assistance funding in the months to come, according to Laura Ullrich, director of economic research for North America at Indeed.

Manufacturing jobs, which Trump has repeatedly promised to restore, fell by 12,000 and are now down by 78,000 over the year. However, this need not necessarily be a sign of things going wrong, with economists pointing to a sign of long-term trends alongside increased production underway.

“As you get better at making manufactured product – that is productivity growth – you don’t need as many people to make the same things you did before,” Chad Syverson, Economics professor at the University of Chicago, told USA Today.

However, the Trump administration’s crackdown on immigration, evidenced by the Immigration and Customs Enforcement (ICE) raids on Friday (September 5) on a Hyundai factory under construction in Georgia, may have played a direct hand. Similarly, declining consumer confidence and Trump’s evolving tariff policies may motivate manufacturers to revise their plans and refrain from adding staff to their payroll.

Rising racial gap in unemployment

The unemployment rate for black Americans rose by 0.3% over the previous month to reach 7.5% in August, over double the unemployment rates of white Americans (3.7%) and Asian Americans (3.5%). The unemployment rate of Hispanic Americans stood at 5.3% as well.

The relatively higher unemployment rates of Black and Hispanic Americans should serve as a warning about the signs of economic distress underway. The numbers also indicate that the “last hired, first fired” phenomenon affecting Black Americans is likely underway, implying that they are the first to feel the impact of an economic downturn, and the last to recover from one. Black and Hispanic Americans were disproportionately affected during the Great Recession.

First signs of the DOGE impact

The Department of Government Efficiency (DOGE), the quasi-government agency entrusted with reducing wasteful government expenditure, has slashed 97,000 federal jobs since January. The latest report indicates a decline of 15,000 government jobs in August alone.

Signs of broader weakness

The report indicated that the average weekly hours in August declined to 34.2 hours, a potential sign that employers were demanding less labour. A corresponding rise in the labour force participation rate was recorded for August, with the share of the American population actively working or looking for work increasing to 62.3%.

A high participation rate in a healthy economy indicates a transitional period, meaning workers are seeking jobs, but not enough jobs are being created right away to match this demand. During a period of impending economic distress, this understanding is upended, and job-seekers may be seeking work, possibly due to the nature of impending financial stress. Which way this trend unfolds will become clear in the months to come.