US Labor Market Contracts Unexpectedly in July, Interest Rate Hike Bets Ease

The US labor market contracted unexpectedly 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. The report also included sharp downward revisions to previous data, with payroll gains for May and June revised lower by a combined 103,000 jobs.

The unemployment rate edged down to 4.1% from 4.2%, helped largely by another drop in labor force participation, which slipped to 61.4%, the lowest level in more than five years.