US Nonfarm Payrolls Preview: Hiring Slows While Layoffs Stay Near Historic Lows

Key Takeaways

• Economists surveyed by The Wall Street Journal expect US nonfarm payrolls to increase by about 83,000 in July, following June’s 57,000 gain, while the unemployment rate is forecast to remain at 4.2%.
• Forward-looking indicators point to weaker recruitment: ADP recorded only 44,000 new private-sector jobs in July, and job openings fell to 7.36 million in June.
• Layoffs remain unusually low, suggesting that employers are reluctant to release skilled workers even as they become more cautious about adding staff.
• Healthcare continues to account for a disproportionate share of employment growth, while inflation and wage trends remain central to the Federal Reserve’s policy outlook.

The US labor market is sending a mixed message ahead of the July nonfarm payrolls report: companies are hiring fewer workers, but they are also showing little appetite for large-scale layoffs.

The Bureau of Labor Statistics is scheduled to release the July employment report on Friday, August 7, at 8:30 a.m. Eastern Time. Economists surveyed by The Wall Street Journal expect the economy to have added approximately 83,000 jobs, up modestly from 57,000 in June but well below the roughly 200,000 monthly pace commonly recorded before the pandemic. The unemployment rate is projected to hold at 4.2%.

The anticipated figures would reinforce the view that the labor market has settled into a “low-hire, low-fire” environment. Demand for workers has cooled substantially, but employment conditions have not deteriorated enough to produce a sharp rise in unemployment.

Hiring Momentum Fades After the Spring Rebound

US payroll growth accelerated to 214,000 in March, raising hopes that employment demand was recovering. That momentum subsequently faded as businesses became more selective about recruitment and focused on filling essential vacancies instead of expanding their workforces.

Recent private-sector data have strengthened the case for a softer July report. ADP estimated that private employers added just 44,000 jobs during the month, missing the market forecast of about 75,000 and slowing from a revised 95,000 in June. Education and healthcare provided most of the increase, while several other industries reported limited or negative hiring.

The latest Job Openings and Labor Turnover Survey delivered a similar signal. US job openings fell by 178,000 to 7.36 million in June, while the number of hires was little changed at 5.3 million. The combination indicates that employers are maintaining existing teams but have become less willing to compete aggressively for additional workers.

Higher energy and operating costs have contributed to this caution. At the same time, tighter immigration policies have reduced the supply of available labor in some industries. Slower employment growth therefore reflects weakness in both labor demand and labor-force expansion, rather than a conventional downturn driven entirely by widespread job losses.

Layoffs Remain Exceptionally Low

Despite the slowdown in recruitment, unemployment claims continue to indicate that companies are retaining workers.

Initial applications for unemployment benefits increased by only 1,000 to a seasonally adjusted 199,000 in the week ending August 1. The four-week average stood at 198,750, while continuing claims remained near 1.8 million. Claims had fallen to 187,000 two weeks earlier, their lowest level since 1969.

Corporate layoff announcements also declined in July. Employers announced 33,429 job cuts, according to Challenger, Gray & Christmas data, representing a 27% decrease from June and a 46% decline from July 2025.

One explanation is that businesses remember how difficult and expensive it was to recruit skilled employees during earlier periods of labor scarcity. Even when sales growth becomes less certain, companies may prefer to reduce job openings, overtime or temporary positions before dismissing experienced staff.

This behavior is helping keep the unemployment rate stable, but it also creates a difficult environment for people seeking new work. Existing employees retain relatively strong job security, while recent graduates, unemployed workers and people attempting to change careers face fewer openings.

Healthcare Carries an Increasing Share of Job Growth

The composition of employment growth is becoming more concentrated. Healthcare providers—including hospitals, clinics and outpatient services—have accounted for more than half of the net jobs created in the United States during 2026, according to estimates cited by MarketWatch.

Demand in healthcare is supported by an aging population and persistent staffing requirements, making it less sensitive to short-term economic changes than manufacturing, technology or discretionary services.

However, reliance on one major industry also exposes the underlying weakness of the broader employment market. A healthy expansion would normally produce hiring across construction, manufacturing, professional services, retail and leisure. The current concentration suggests that many companies outside healthcare remain reluctant to increase headcount.

Inflation Remains the Fed’s Central Concern

Average hourly earnings rose 0.3% in June and 3.5% from a year earlier. Economists expect a similar 0.3% monthly increase and a 3.5% annual gain for July. That pace is close to pre-pandemic norms and suggests that labor costs are no longer the primary source of inflation pressure.

Federal Reserve Chair Kevin Warsh has described the labor market as “broadly stable,” citing low unemployment, limited layoffs and solid nominal wage growth.

Unless Friday’s payroll report produces a major surprise, inflation is therefore likely to remain the more important factor in the Fed’s next policy decision. A sharply weaker report could intensify concerns about economic growth, while stronger employment and wage data could reinforce expectations that interest rates will remain elevated. The most likely outcome, however, is further evidence of a labor market that is cooling gradually without breaking.