US Jobs Report Shocks Markets with Unexpected Payroll Cut

The US labor market unexpectedly weakened in July as employers cut 23,000 jobs, defying expectations for payroll growth. The unemployment rate held at 4.1%, matching economists' forecasts.

The Bureau of Labor Statistics also revised May and June payrolls down by a combined 103,000 jobs, indicating the labor market was weaker than previously reported. Healthcare remained the main source of private-sector hiring, while local government education and retail recorded the largest job losses.

Average hourly earnings rose 3.2% from a year earlier, even as inflation continued to weigh on household budgets. The weaker employment report is likely to reinforce expectations that the Federal Reserve will keep interest rates unchanged as policymakers continue to assess the labor market and inflation.