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The US job market slowed sharply in July as President Trump's tariffs began to bite, and his response was to fire the head of the Bureau of Labor Statistics (BLS), instantly causing concern among business leaders and recruiters who rely on solid data for planning and decision-making.
US employers added just 73,000 jobs last month, according to the latest report from the Labor Department. Job gains for May and June were also largely erased, while the unemployment rate edged up to 4.2%.
The monthly employment report is one of the most closely-watched pieces of government economic data and can cause sharp swings in financial markets. The disappointing figurea sent US stock market indexes about 1.5% lower on Friday.
Trump reacted just hours later by advancing baseless claims that the jobs data had been manipulated. "I thought they were RIGGED in order to make the Republicans, and ME, look bad,’" he wrote on his social media platform.
In another post, he announced the firing of Erika McEntarfer, the BLS director appointed by former President Joe Biden.
"She will be replaced with someone much more competent and qualified. Important numbers like this must be fair and accurate, they can't be manipulated for political purposes," he said.
Federal law allows presidents to remove commissioners of labor statistics before their four-year term ends. McEntarfer's term was set to run until early 2028.
Job losses mount, critics slam dismissal
The July report followed the new round of global tariffs announced by Trump a day earlier. The federal government shed 12,000 jobs during the month and has lost around 84,000 workers since the start of the year.
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Factories shed 11,000 jobs, despite trade policies aimed at helping domestic manufacturing.
“These tariff wars are beginning to wear us out,” said one unnamed factory manager in a survey released by the Institute for Supply Management. “There is zero clarity about the future… So far, tremendous and unexpected costs have been incurred.”
Health care was one of the few sectors showing solid job growth. But many federal employees have taken buyouts and remain officially employed until September so that impact is yet to become visible.
Criticism from economists
The firing of McEntarfer drew heavy criticism from economists and former BLS officials. A joint statement from the Friends of BLS, including former commissioners William Beach and Erica Groshen, called the dismissal unjustified.
“This rationale for firing Dr. McEntarfer is without merit and undermines the credibility of federal economic statistics that are a cornerstone of intelligent economic decision-making by businesses, families, and policymakers.”
Arin Dube, an economist at the University of Massachusetts-Amherst, warned on X that the action “threatens to destroy trust in core American institutions, and all government statistics.”
Labor Secretary Lori Chavez-DeRemer confirmed that McEntarfer was no longer in her post and announced that deputy commissioner William Wiatrowski would serve as acting director.
“I support the President’s decision to replace Biden’s Commissioner and ensure the American People can trust the important and influential data coming from BLS,” she said.
