US Labor Market Contracts Unexpectedly as Payrolls Fall by 23,000 Jobs

The US labor market unexpectedly contracted in July, with nonfarm payrolls posting their first monthly decline in years. According to the Bureau of Labor Statistics, nonfarm payrolls fell by a seasonally adjusted 23,000 in July, following a downwardly revised decline of 20,000 jobs in June. Economists surveyed by Dow Jones had expected employers to add 83,000 jobs during the month.

Despite the decline in payrolls, the unemployment rate edged down to 4.1% from 4.2%, largely due to another drop in labor force participation, which slipped to 61.4%, its lowest level in over five years. Job losses were broad-based across several industries, with employment in local government education declining by 50,000 positions and retail trade shedding 19,000 jobs.

However, healthcare remained one of the few bright spots in the labor market, adding 22,000 jobs during July. Wage growth also remained subdued, with average hourly earnings for all private-sector employees increasing by just 2 cents to $37.62, rising 3.2% from a year earlier.