US Jobs Fall in July as Hiring Cools

US jobs fell in July, a sign that the summer labor market has cooled more sharply than economists expected. The latest US jobs report showed a surprise loss of 23,000 positions last month, even as the unemployment rate held at 4.1%.

Federal labor data showed the decline was led by cuts in local government education and retail work. The retail pullback included losses in wholesale stores, hypermarkets, gas stations and general merchandise shops. Economists had expected the economy to add about 80,000 jobs instead of posting a decline. The Bureau of Labor Statistics also revised down job growth in May and June by a combined 103,000, deepening the picture of a weaker summer for hiring.

The report added another layer of pressure to the debate over interest rates. Analysts said the softer reading could reduce the case for a rate increase next month, even though inflation remains elevated. Nancy Vanden Houten, lead economist at Oxford Economics, said expectations for higher rates had been scaled back since the central bank’s decision last month. US stock markets opened higher on Friday after the release, as investors weighed the possibility that the weaker data might help keep borrowing costs steady.

Average hourly earnings also pointed to slower momentum than expected. Pay rose 3.2% over the year to July, below the 3.5% economists had forecast. Average hourly earnings for private non-farm employees came in at $37.62. While payrolls are often softer in July, Premier Miton chief investment officer Neil Birrell said this drop was weaker by some distance and tied it to labour force participation returning to levels not seen since the days of Covid.