The US job market is showing severe signs of weakness. A prolonged downturn in employment could negatively impact the economy and potentially trigger a recession.
Job openings decreased in July to near pandemic-era lows, signaling a potential cooling of the labor market.
U.S. job growth significantly slowed in August, with the unemployment rate rising to 4.3%, a nearly four-year high, indicating a weakening labor market and strengthening the likelihood of a Federal Reserve interest rate cut this month.
In August, employers reduced manufacturing jobs by 12,000, contributing to a sector-wide payroll decrease of 42,000 positions since April, based on a Center for American Progress analysis of government labor data.
U.S. manufacturing employment fell by 33,000 jobs throughout 2025, according to Labor Department figures.
US-based employers announced 85,979 job cuts in August 2025, representing a 39% increase from July and a 13% increase year-over-year, reaching the highest level in three months and for any August since 2020.
Major technology companies in the US, including Oracle and Salesforce, are implementing job cuts and mass layoffs. This trend is attributed to the automation of roles and the subsequent redundancy of remaining positions.
The tech industry continues to experience significant layoffs in 2025. Reportedly, over 150,000 job cuts happened across 549 companies in the previous year, and as of early 2025, more than 22,000 workers have been affected, with February alone accounting for 16,084 reductions.
Weakening Job Market
The Bureau of Labor Statistics reported that job openings were approximately 7.18 million in July, marking the second instance below the 7.2 million threshold since the end of 2020.
This was the lowest since September 2024, when just more than 7.1 million openings were reported.
This also highlights increasing concerns about a weakening labor market, a trend previously suggested by anecdotal evidence.
A Labor Department report released recently revealed that the labor market created fewer jobs than previously thought, sparking concerns about the economy’s health and data collection accuracy.
Annual revisions to nonfarm payrolls data for the year before March 2025 indicated a decrease of 911,000 from initial estimates, as per a preliminary report from the Bureau of Labor Statistics.
Employers effectively added almost a million fewer jobs than originally reported in the year that ended in March 2025.
The employment picture in the US is looking to weaken further. “The labor market appears weaker than originally reported. A deteriorating labor market will allow the Fed to highlight the need to ease rates. Investors should expect the Fed to officially start the rate-cutting campaign at the next meeting. Solid household wealth is keeping the middle and upper-income consumer afloat but has the economy in a typical business cycle,” says Jeffrey Roach, Chief Economist for LPL Financial.
Recent data indicate a softening labor market, with average payroll growth in June, July, and August at only 29,000 per month, insufficient to maintain a stable unemployment rate.
Another set of data that looks like a possible indication of trouble in the labor market is the Private payrolls data. U.S. private-sector hiring rose less than expected in August.
Private payrolls increased by 54,000 in August, falling short of the 75,000 forecast and marking a slowdown from July’s revised gain of 106,000, according to ADP data.
US Fed Rate Cut
US Fed’s FOMC meeting takes place next week and Powell will announce the rate cut decision on September 17. “It’s now a lock that the Fed will cut interest rates at their meeting next week and that further rate cuts will follow in the months ahead. The question is by how much,” says Bill Adams, Chief Economist for Comerica Bank.