U.S. Economy Loses 23,000 Jobs, Led By Public School Job Cuts

WASHINGTON, D.C. — The U.S. economy lost 23,000 jobs in July, a sharp miss against forecasts of solid gains, according to data released Friday by the Bureau of Labor Statistics.

The report also showed substantial downward revisions to prior months and a slight decline in the unemployment rate, signaling a softening labor market that could influence Federal Reserve policy decisions.

Nonfarm payroll employment fell by 23,000 last month, following an average monthly gain of about 34,000 over the previous year. Economists had expected an increase of roughly 80,000 to 83,000 jobs.

Private-sector employment rose by 30,000, while government payrolls dropped by 53,000, driven largely by a 50,000 decline in local government education as COVID-era grant money dries up and the student population nosedives due to falling birthrates.

Revisions painted an even weaker picture of recent months. May’s job gains were revised down by 66,000 to 63,000, and June’s by 37,000 to 20,000. Combined, the economy added 103,000 fewer jobs in those two months than previously reported.

The unemployment rate edged lower to 4.1 percent from 4.2 percent, with about 6.9 million people unemployed. However, the decline coincided with a drop in labor force participation to 61.4 percent—near a multi-year low—as more people left the workforce. The employment-population ratio stood at 58.9 percent.

Average hourly earnings for private nonfarm workers rose just 2 cents to $37.62, for a 3.2 percent increase over the past year. The average workweek remained unchanged at 34.3 hours.

Job losses were concentrated in several areas. Leisure and hospitality employment fell by 40,000, retail trade by 19,000, and financial activities by 14,000.

Gains came in health care (+22,000, though slower than the recent 12-month average of 36,000) and construction (+22,000). Most other major sectors showed little net change.

The cooler-than-expected report caused traders to scale back expectations for a Federal Reserve interest-rate increase at the central bank’s September meeting. Stock indexes rose and Treasury yields fell in response.

The Employment Situation report is a closely watched indicator of economic health. Friday’s data suggest the labor market has lost momentum after earlier resilience, raising questions about the broader outlook for growth and inflation. The figures are preliminary and subject to further revision.