US Labor Market Stalls with Unexpected Job Losses

The US labor market took a step back in July, shedding 23,000 jobs and failing to meet economists' expectations. The unemployment rate ticked down slightly to 4.1%, but the overall trend is concerning.

Economists had forecast a gain of 83,000 jobs, more than June's 57,000. However, the Bureau of Labor Statistics revised down the prior two months by a combined 103,000, with May's total cut by 66,000 to 129,000 and June's lowered by 37,000.

The hiring data comes against a backdrop of elevated energy prices due to the ongoing US-Iran conflict. The average price of regular gasoline remains high at $4.04 per gallon, up 36% since February 28. Inflation is also above the Federal Reserve's target at 3.5%, while wages are struggling to keep pace.

Heather Long, chief economist at Navy Federal Credit Union, described the report as 'bleak', citing a stall in labor market growth and a decline in labor force participation. The latter was the lowest since February 2021.