The US jobs report July 2026 showed the world’s largest economy unexpectedly lost 23,000 jobs last month, while the unemployment rate edged lower even as the labor force participation rate fell to its weakest level in more than five years, the Bureau of Labor Statistics reported Friday.
Nonfarm payrolls declined by a seasonally adjusted 23,000 in July, according to the BLS, compared with a downwardly revised loss of 20,000 in June. Economists polled by Dow Jones had forecast an increase of 83,000 jobs, making the miss one of the sharpest deviations from consensus in recent months.
The unemployment rate slipped to 4.1%, while the labor force participation rate fell to 61.4%, its lowest level in over five years, the report showed.
Revisions to prior months added further weakness. The BLS revised May’s payroll count down to 63,000, a reduction of 66,000 from the initial estimate, bringing the 12-month average pace of job creation down to just 34,000.
Local government education led the losses, shedding 50,000 positions, while retail trade cut 19,000 jobs and financial activities declined by 14,000, the BLS reported. Healthcare remained the strongest sector, adding 22,000 jobs, below its 12-month average of 36,000.
Average hourly earnings rose by just 2 cents during the month, pulling the 12-month wage growth rate down to 3.2%, below the forecast of 3.5%.
The weaker-than-expected data lands as Federal Reserve policymakers remain divided over the path for Federal Reserve interest rates, with the labor market cooling even as inflation stays above the central bank’s 2% target. The US economy’s recent 1.5% GDP growth has added to the uncertainty over the central bank’s next move. The Federal Open Market Committee voted 9-3 last week to hold its benchmark rate steady.
Following Friday’s July jobs report, traders scaled back bets on a September rate hike, with odds falling to 44% and shifting to 58.3% for October, according to the CME Group’s FedWatch tool. Stock futures tied to the Dow Jones Industrial Average rose by close to 200 points, while Treasury yields fell sharply.
Recent data on US economy jobs July 2026 points to a broader slowdown, with declining participation, weak wage growth and downward revisions all signalling a cooling employment picture heading into the autumn.
The July employment figures are subject to revision in subsequent monthly reports, as is standard for BLS employment data.
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