US Economy Experiences First Monthly Job Decline Since 2026

The US economy experienced its first monthly decline in nonfarm payroll jobs since February 2026, shedding 23,000 positions in July. The unemployment rate dropped to 4.1% from 4.2% in June, but this decrease was largely due to workers leaving the labor force rather than finding new employment.

Economists had forecasted around 83,000 payroll gains for July, but the actual figure fell short of expectations. The shortfall was compounded by significant downward revisions to prior months' employment figures: May's gain was cut from 195,000 to 129,000, and June's revised downward from a gain of 57,000 to a loss of 10,000.

The July employment decline signals a cooling labor market after several months of modest growth. The 12-month average for nonfarm payroll job gains stands at 34,000 per month, well below the pace seen in prior years. Government payrolls contracted by 53,000 jobs in July.