US Economy Loses 23,000 Jobs in Surprise July Decline

The US economy unexpectedly shed jobs in July, adding to concerns about future growth. Non-farm payrolls decreased by 23,000, a significant drop from economists' forecast of an 80,000 increase.

This unexpected decline has raised questions about whether the Federal Reserve will raise interest rates in September, with financial markets pricing in a 43.9% chance of a hike compared to 57% before the jobs report.

The unemployment rate fell to 4.1% in July from 4.2% in June, but this was due to another 264,000 people leaving the labor force, pushing the participation rate to a near five-and-a-half year low of 61.4%. The Labor Department's Bureau of Labor Statistics (BLS) reported that non-farm payrolls decreased by 23,000 jobs in July after a downwardly revised 20,000 increase in June.

Economists polled by Reuters had forecast payrolls rising 80,000 after advancing by a previously reported 57,000 in June. The economy added 103,000 fewer jobs in May and June than previously estimated, leading to downgrades to the two months that resulted in President Donald Trump's firing of BLS commissioner Erika McEntarfer.