US Economy Lost 23,000 Jobs in July 2026, Missing Forecasts by Wide Margin
The U.S. economy shed 23,000 jobs in July 2026, far below economists' expectations for a gain of 83,000 positions. The unemployment rate fell to 4.1%, but only because the labor force shrank. Wage growth slowed to 3.2% year over year, below the current inflation rate of 3.5%.
The U.S. economy lost 23,000 jobs in July 2026, the Bureau of Labor Statistics reported on August 7. Economists surveyed by Dow Jones had expected a gain of 83,000 jobs.
The report also included downward revisions to May and June job growth totaling 103,000 positions, making the labor market picture weaker than previously understood.
The unemployment rate fell to 4.1%, but analysts said the decline was not a positive sign. It was driven by a drop in the labor force participation rate, which fell to 61.4%, the lowest level since February 2021. Fewer people were looking for work, not more people finding it.
Sector-specific losses were broad. Local government education shed 50,000 roles, largely due to summer break. Leisure and hospitality lost 40,000 jobs, potentially tied to the end of the World Cup. Retail trade declined by 19,000 positions, and financial activities lost 14,000 jobs.
Healthcare added 22,000 jobs, though that was slower than the sector's 12-month average. Construction also added 22,000 roles.
Wage growth cooled to 0.1% for the month, bringing the year-over-year increase to 3.2%. That is the slowest pace in five years and below the current inflation rate of 3.5%.
Before the report, the Federal Open Market Committee had voted 9-3 to hold the benchmark rate between 3.5% and 3.75%. After the data came out, the probability of a September rate hike fell from over 50% to roughly 40% to 44%.
