In July, U.S. jobs unexpectedly shifted to a decline.
On the 7th (local time), the Bureau of Labor Statistics at the Labor Department said U.S. nonfarm payrolls in July fell by 23,000 from the previous month.
The Dow Jones forecast called for an increase of 83,000 jobs in July. The reported figure differed by about 100,000.
Job gains for the previous two months were also revised down sharply. The May increase was revised down by 66,000 (from up 129,000 to up 63,000), and the June increase was revised down by 37,000 (from up 57,000 to up 20,000).
Combined downward revisions to May–June job gains from the prior releases totaled 103,000.
By industry, a loss of as many as 50,000 jobs in the local government education institutional sector had a decisive impact on July's decline.
This may reflect seasonal factors such as temporary job reductions during summer vacation. However, the Bureau of Labor Statistics noted that net employment changes in the local government education institutional sector had remained low over the past 12 months.
The retail institutional sector also decreased by 19,000 in July, contributing to the decline, and the financial activities institutional sector fell by 14,000, extending a downturn in employment that has continued since May last year.
The health care institutional sector added 22,000 jobs in July, but the gain was below the prior 12-month average of 36,000.
The unemployment rate was 4.1% in July, down from 4.2% a month earlier and below expectations of 4.2%.
A drop in the labor force participation rate from 61.5% in June to 61.4% in July influenced the decline in unemployment. The participation rate matched its lowest level since February 2021 during the pandemic (61.4%).
While a falling jobless rate is usually a positive sign, it suggests the possibility that more people have given up job searches and left the labor market.
With hiring slowing, the U.S. labor market has remained in a "no hire, no fire" state, with layoffs also historically low.
Average hourly earnings rose 0.1% from the prior month in July, below the 0.3% expected. They were up 3.2% from a year earlier, also under the 3.5% forecast.
Wage growth falling short of expectations suggests limited upward inflationary pressure from the job market.
As U.S. employment unexpectedly declined in July, concerns about potential labor-market weakness are expected to resurface in the market.