U.S. employers cut 23,000 jobs in July

U.S. employers unexpectedly cut 23,000 jobs in July, a sharp reversal that undershot forecasts and added to signs that hiring has weakened across the economy.

The unemployment rate was 4.1%, with CBS News, NPR and NBC News reporting that it dipped from 4.2% in June. The Guardian reported that the rate held steady at 4.1%. Several reports said the lower jobless rate reflected a shrinking or stalled labor force rather than stronger opportunities for workers. NPR reported that more than 260,000 people left the workforce, while CBS News said the labor force participation rate fell to 61.4%, the lowest level since February 2021.

Economists had expected job growth, not losses. Forecasts varied by survey: economists polled by FactSet expected a gain of 95,000 jobs, while economists surveyed by Dow Jones expected 83,000. The Guardian also cited expectations for 83,000 new jobs.

The Labor Department also revised prior months lower, showing earlier hiring was weaker than first reported. CBS News and NBC News said May and June were revised down by a combined 103,000 jobs. NBC News reported that May’s total was cut by 66,000 to 129,000 jobs added, while June’s total was lowered by 37,000 to a gain of 57,000. The Guardian reported that the Bureau of Labor Statistics revised the previous two months down by a total of 74,000 jobs.

Losses were concentrated in several sectors. Local government education fell by 50,000 jobs, retail lost 19,000 and the financial industry shed 14,000, according to NBC News. NPR reported that restaurants and retailers cut thousands of jobs and local government also saw large losses. Health care continued to grow, adding 22,000 jobs, though the Bureau of Labor Statistics said that was slower than its average monthly gain over the prior 12 months.

“The rate dropped to 4.1% in large part because labor force growth has stalled, not because opportunity is expanding,” Angela Hanks, chief of policy programs at the Century Foundation, told CBS News.

Nic Puckrin, a markets expert and former Goldman Sachs analyst, said in an email cited by CBS News: “Hiring has gone into reverse — the economy actually shed jobs last month — and it turns out many of the jobs we thought were there in previous months never really existed.”

Other labor market data also pointed to a slowdown. The Guardian reported that private employers added 44,000 jobs in July, according to ADP, down from 98,000 in June. Job openings fell by 178,000 to 7.4 million in June, with health care and social assistance openings dropping by 147,000. CBS News reported that LinkedIn data showed hiring and job postings were essentially unchanged from June, while applications per applicant rose, suggesting more competition for available roles.

Layoffs, however, remain low. Challenger, Gray and Christmas reported that U.S.-based employers announced about 33,500 job cuts in July, the lowest monthly total in two years, according to The Guardian. CBS News reported that the four-week average of initial jobless claims fell below 200,000 for the week ending Aug. 1, the first time below that level since October 2022, citing PNC Economics.

“Although the hiring rate is low, the unemployment rate remains steady because layoffs are also low,” Federal Reserve Governor Lisa Cook said Wednesday at an Anchorage Economic Development Corporation event.

The report lands as the Federal Reserve weighs inflation against a softer labor market. Annual inflation was 3.5% in the most recent reading, above the Fed’s 2% target. Average hourly earnings rose 0.1% from June and 3.2% from a year earlier, below economists’ expectations and below inflation, NBC News reported.

“The labor market is stalling again,” Heather Long, chief economist at Navy Federal Credit Union, wrote, calling the report “bleak.”

Daniel Zhao, chief economist at Glassdoor, told NPR that workers are increasingly anxious. “We are increasingly hearing from workers that they are anxious about their job security and they are frustrated by the fact that they are stuck in roles that are not necessarily good for them,” he said. “And that’s on top of workers who are not in a job right now and feel frozen out of the job market.”