The United States labor market gave an unexpected sign of weakness in July and, against analysts' forecasts, the economy lost 23,000 jobs, a result that breaks with growth expectations for that month and once again puts the focus on the pace of slowdown in employment. Although the unemployment rate fell slightly to 4.1%, other indicators show that the lower participation of workers in the labor force also influenced this result.
The United States Bureau of Labor Statistics (BLS) reported that total nonfarm employment fell by 23,000 positions during July, after the monthly average had been 34,000 new jobs in the previous 12 months.
In addition, the agency revised downward the figures for May and June, jointly eliminating 103,000 positions that had originally been reported.
The report also noted that the unemployment rate stood at 4.1%, practically unchanged compared to the behavior observed during the last year. The total number of unemployed people remained at 6.9 million.
One of the factors that helped reduce unemployment slightly was the drop in labor force participation. During July, this indicator fell to 61.4%, its lowest level since February 2021, reflecting that fewer people are actively working or seeking employment.
“The rate fell to 4.1% largely because labor force growth has stagnated, not because opportunities are expanding,” Angela Hanks, director of policy programs at the Century Foundation, told CBS News.
The largest job reduction occurred in the local government education sector, where 50,000 positions disappeared during July. Retail trade also recorded a decline of 19,000 jobs, especially in general merchandise stores, warehouse clubs, hypermarkets and service stations.
Financial activities continued to show weakness with an additional 14,000 job losses. According to the BLS, that sector has eliminated 121,000 positions since the peak recorded in May 2025.
In contrast, the health sector once again supported part of the US labor market. During July it added 22,000 new jobs, primarily in outpatient health care services. However, the growth was lower than the monthly average of 36,000 positions seen over the past year.
The rest of the major industries, including construction, manufacturing, transportation, warehousing, professional services, leisure and hospitality, showed little change during the month.
Meanwhile, in terms of salary, the average hourly income for private sector workers barely increased two cents during July, reaching $37.62 dollars per hour.
In annual terms, salaries grew 3.2%, a slower pace than expected by the market and which reflects a gradual moderation in salary pressures.
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