CNBC's Rick Santelli joins 'Squawk Box' to break down the July jobs report. The U.S. added just 73,000 jobs in July and numbers for prior months were revised much lower.

Washington

The U.S. labor market saw a slowdown in July, with non-farm payrolls increasing by 73,000, the lowest monthly gain this year. This figure is notably lower than previous months and comes alongside a significant two-month downward revision of 258,000 jobs. The unemployment rate edged up to 4.2%, the fourth time this year it has reached that level. Average hourly earnings rose by 0.3% month-over-month and 3.9% year-over-year, slightly above expectations. Labor force participation and underemployment rates also showed minor changes, while market interest rates moved lower in response to the jobs data and revisions.

U.S. added just 73,000 jobs in July

Rick Santelli here with the big breaking news of the morning, the big July job, job, jobs report. Non-farm payrolls up $73,000. Definitely a bit light, but maybe it's the Goldilocks, we'll have to see how the market moves. $73,000, that would be the lightest rate of the year. You have to go back to October of last year to find a lower non-farm pace at $44,000. Now the revisions, here's a biggie. The two-month revision, minus $258,000. That is a biggie, a biggie. Average hourly earnings on a month-to-month basis come in as expected, up three-tenths. And if we look at year-over-year perspective, up 3.9. That's important. That's a tenth higher than expected, two-tenths higher than the 3.7 in the rearview mirror. And that 3.7 was the lowest year-over-year earnings rate going back to mid-21. If we look at the hours worked, hours worked at $34.3, that's up a tenth. That's a good thing. The unemployment rate moves up a tenth. It moves up a tenth from $4.1 to $4.2. And this makes it the one, two, three, the fourth $4.2 read of the year. To find a higher reading, you're going way back, you're going all the way back to October of 21 when it was $4.5. Now if we look at labor force participation, it comes in a tenth light, $62.2. That's a tenth light in the rearview mirror and expectations, $62.2. To find a lower number, you're going back to the end of 22. And finally, the underemployment rate, which is called U6, that $4.2 is called U3. $7.9 on the underemployment rate, that would equal where we were in March. To find a higher one, you're going to February. What's the market doing? The market in interest rates is moving lower. Why is it moving lower? Because of the big revision would be my guess, and maybe partially due to the light non-farm, but it is the revision. We have moved down quite a bit. We're at $4.32 now, pre-number we were hovering around $4.39-ish. And if you look at where we settled last week in a tenth, it was at $4.39. So we're now down about seven basis points on the week. A two-year last week closed at $3.93. It is now down ten basis points, and that's after closing at the highest level yesterday in the short end since mid-June, of course, of this year. Pre-opening equities, they're moving a bit lower, but they haven't made new lows in the Dow futures yet, so we want to monitor that. Joe and the gang, back to you. Yeah, thanks, Rick. I'm not on True Social, but I'm waiting. We're going to hear something about too late, are we not? It's imminent. But this gives everybody something, though, Rick. It gives people that hate the tariffs, the tariffs are killing the economy. People that want interest rates to come down, see, I told you so. The labor market's weakening and there's no inflation. This is going to give everybody on both sides of all the issues just a bunch of stuff that they're going to point to as evidence. I'm waiting for Steve's take. He's working on it right now. He's typing. I don't get all the minutia. I don't get all the minutia. I get to gloss over what just comes across the wires. But one thing I will throw out there, one of the key factors of this administration has been trying to pare down the size of government. So government hiring is included in this report. So to see nonfarm payrolls lower, to see revisions, shouldn't be all that shocking, at least in terms of how much government roles have played in these numbers, need to point that out. In terms of the unemployment rate, 4.2, that's definitely an uptick, but still, historically speaking, well-behaved. Those are my two cents.

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Breakdown