As summer rolls on, there's a quiet shift taking place in the U.S. economy—one that could soon become harder to ignore. This Thursday's nonfarm payroll report is poised to become a pivotal moment, offering the first concrete signs that tariffs may be putting a drag on the labor market.
According to economists surveyed by Dow Jones and The Wall Street Journal, U.S. employers likely added around 110,000 jobs in June, down from 139,000 in May. Meanwhile, the unemployment rate is expected to tick up to 4.3%—the highest since October 2021. That figure may not raise eyebrows on its own, but the trend it reflects is what has analysts watching closely.
Pantheon Macroeconomics, analyzing private-sector data from platforms like Homebase, noted growing signs that job growth is steadily losing momentum. Small businesses and service industries, in particular, appear to be pulling back hiring plans.
These macro shifts might seem abstract—until you hear from people like Kevin Russell, 35, a quality control technician at an auto parts supplier in Detroit. His company was planning to expand earlier this year, hoping to bring on 15 new workers. But in March, those plans were shelved.
“Management told us they’re hitting pause,” Kevin said. “With import costs possibly going up due to new tariffs, they said they just can’t commit to expanding right now.”
Kevin’s story isn’t unique. Across the country, many small and mid-sized manufacturers are putting hiring and investment plans on hold, not because business is bad, but because policy uncertainty is high. When executives can’t predict whether tariffs will spike next month—or be lifted—they tend to err on the side of caution. That means fewer job postings, slower onboarding, and hiring freezes even in otherwise healthy companies.
On Wednesday, another piece of private-sector data added to the worries. Payroll provider ADP reported that private-sector employment shrank by 33,000 in June, a stunning reversal from the roughly 100,000 gain economists had forecast.
“The ADP numbers sharply increase the odds of a downside surprise in Thursday’s official report,” said Jeffrey Roach, Chief Economist at LPL Financial. “What we’re seeing is uncertainty in trade policy starting to bleed into hiring decisions.”
It’s important to be clear: this isn’t a labor market in free fall. Compared to the pandemic crash of 2020, when millions of jobs evaporated almost overnight, this is more of a soft deceleration. Think of it as an economy shifting from fifth gear into third—still moving, just more slowly.
That’s not necessarily a bad thing, at least from an inflation standpoint. An overheated job market often triggers wage surges and consumer price hikes, which in turn can push the Federal Reserve to raise interest rates. A bit of cooling might give inflation the space to settle.
But for ordinary families, that kind of macroeconomic “silver lining” doesn’t always make the day-to-day any easier.
Emily Hopkins, a recent college graduate and single mom living in Tucson, Arizona, has been job-hunting for weeks with little success. “I thought things would be better this summer,” she said. “But I’ve sent out dozens of applications, and barely heard anything back.”
People like Emily—young, eager, and just entering the workforce—are often the first to feel the effects when employers start slowing their hiring pace. No one tells them explicitly that there’s a hiring freeze. The silence is what gives it away.
Many executives admit that it’s not the quality of applicants that’s holding them back—it’s the lack of clarity on future policy. One COO of a midsize appliance manufacturer in Texas put it bluntly: “We don’t know what the tariff landscape will look like next quarter. One week we’re looking at new duties, the next week those might be reversed. That’s harder to manage than the tariffs themselves.”
So here we are, in a labor market that’s not in crisis, but not thriving either. Businesses aren’t firing workers en masse, but they’re hiring more cautiously. It’s a pause—maybe a pivot—fueled by trade uncertainty and macroeconomic headwinds.
If Thursday’s report confirms a slowdown to 110,000 jobs or less, investors will likely revisit their assumptions about the U.S. economy’s resilience. For the Federal Reserve, which is balancing inflation control with economic stability, these numbers could further complicate its already delicate task.
For Kevin in Detroit or Emily in Tucson, the data isn't just numbers on a screen. It's the job that didn’t open up. The interview that never happened. The quiet tightening of an economy that, just months ago, seemed to be roaring back to life.
Behind every stat is a story—and many Americans are still waiting for theirs to turn a page.