July Nonfarm Payrolls Plunge, Killing Fed Rate Hike Expectations

The U.S. Bureau of Labor Statistics released nonfarm payroll data for July on August 7, revealing a decline in employment by 23,000 jobs. This figure falls significantly short of market expectations, which were set at an increase of 80,000.

Despite the downward revision of prior months' figures by 103,000, the unemployment rate edged down to 4.1%, its lowest level since June 2025. Average hourly earnings rose 3.2% year-over-year, below the anticipated 3.5%.

The unexpected decline in employment and downward revisions undermined labor market resilience, leading U.S. interest rate futures to price in a reduced likelihood of a Fed rate hike in September.