US Jobs Market Suffers Sharp Setback as Non-Farm Payrolls Rise by Just 23,000

The US jobs market suffered a sharp setback in July, with non-farm payrolls rising by just 23,000. This marked a significant slowdown from June's downwardly revised gain of 20,000 and represented the weakest reading since February.

Substantial revisions to prior months also made the picture worse, as May payroll growth was cut to 63,000 from an initially reported 129,000, while June's figure was lowered to 20,000 from 57,000. This removed a further 103,000 jobs from previously published estimates.

The headline unemployment rate unexpectedly edged lower to 4.1% from 4.2%, but this was due to another drop in the labour force participation rate, which fell to 61.4%, its lowest in more than five years.

Further evidence of cooling labour market conditions came from earnings data, with average hourly earnings increasing by just 0.1% month-on-month, missing expectations for a 0.3% rise. On an annual basis, wage growth eased to 3.2%, well below the consensus forecast of 3.5%.