The US economy unexpectedly lost 23,000 jobs last month
By Alicia Wallace, CNN
(CNN) — A summer hiring slump dogged the US labor market in July as the economy unexpectedly lost 23,000 jobs, according to new data released Friday by the Bureau of Labor Statistics.
The unemployment rate dropped to 4.1% from 4.2% as more people left the labor force.
July’s job gains marked a sharp slowdown from June’s total, which was downwardly revised to 20,000 from 57,000. Following revisions, May’s employment gains were essentially halved, dropping to 66,000 from 129,000.
The July report fell far short of economists’ expectations for a 95,000-job gain.
Friday’s report adds to signs that employers are becoming more cautious about hiring as they navigate growing headwinds, which include an aging population, the rapid adoption of AI, higher oil prices, policy uncertainty and the war with Iran.
The unexpectedly negative reading also feeds concerns of underlying weakness in the labor market, which had appeared to be stabilizing after notching paltry employment gains in 2025. The job market has been firmly lodged in a “low-hire, low-fire” dynamic that has left few opportunities for many job seekers.
“Price volatility may be contributing to increased hesitation from employers,” Nicole Bachaud, labor economist at ZipRecruiter, wrote in a note Friday. “With job opportunities remaining scarce, more workers are exiting the labor market entirely.
The job growth also has been uneven, with the bulk of the gains coming from just one sector: healthcare and social assistance. That sector was the largest job-creator last month, adding an estimated 22,600 jobs.
It’s a labor market that’s working for some but not for all. Wage growth stalled in July as average hourly earnings rose just 0.1% from June, dropping the annual rate to 3.2%, a five-year low. Workers’ paychecks, on average, are being entirely eaten away by inflation, which measured 3.5% in the latest Consumer Price Index.
Driving July’s job losses were sectors such as local government, which shed 57,000 jobs; and leisure and hospitality, which dropped 40,000 jobs after losing 43,000 jobs in June.
The government’s monthly snapshot of the labor market is composed of two surveys, one of households and the other of businesses. When the monthly report is released, the initial estimate is often based on incomplete data and is revised twice further in the following jobs reports as the BLS receives more complete information.
Stock futures jumped after the report: Dow futures were up 165 points, or 0.3%. S&P 500 futures rose 0.5%, and futures tied to the Nasdaq 100 rose 1%.
Treasury yields fell. The US dollar index dropped 0.5%. Odds for a Fed rate hike in September fell to 40%, down from 55% one day ago, according to CME FedWatch.
This story is developing and will be updated.
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CNN’s John Towfighi contributed reporting.
