Job Growth: The U.S. labor market lost jobs in July, an surprising contraction likely to reignite questions about the economy’s strength when it is also facing elevated inflation.
The latest U.S. Department of Labor report showed that the economy lost 23k jobs in July, a large shortfall undercutting the gain of 83k that economists surveyed by The Wall Street Journal had expected.
Revisions to prior month results showed that the economy added 103k fewer jobs in May and June.
The unemployment rate reduced to 4.1%, from 4.2% in June, even though fewer people were working due to even more individuals existing the workforce.
In yet another troubling sign for the labor market, the Bureau of Labor Statistics said that it revised down the prior two months by a combined 103,000. May’s jobs total was cut by 66,000 to 129,000 total jobs added, while June’s total was lowered by 37,000 to a total gain of 57,000.
Economists had been expecting wages to continue pacing at 3.5% from a year ago, but instead wage growth slowed.
“The labor market is stalling again,” wrote Heather Long, chief economist at Navy Federal Credit Union, who called the report “bleak.”
The BLS said employment contracted the most in “local government education,” which declined by 50,000 roles, likely reflecting teachers during summer break. It also flagged a contraction of 19,000 roles in the retail industry. The financial industry shed 14,000 roles.
The agency’s data also showed a 5,000 payroll gain in the manufacturing sector in July and an additional 22,000 roles in construction. These bright spots come as the AI data center boom has benefited some industries, but deeply divided many communities where the centers are located.
Friday’s report likely eases some pressure on the Federal Reserve, which had been widely expected to hike the federal funds rate — potentially as soon as September.