The U.S. economy lost 23,000 jobs in July, missing economists' forecast for a gain of 80,000, according to data released Friday by the Bureau of Labor Statistics (BLS).
The headline number masked a sharp divide. Private employers added 30,000 jobs during the month, while government payrolls, driven largely by a seasonal drop in local education, fell by 53,000. The unemployment rate stood at 4.1 percent, with approximately 6.9 million Americans unemployed.
July marked the first month of negative payroll growth since February.
The Bureau summarized the results:
“Total nonfarm payroll employment changed little in July (-23,000), following an average monthly gain of 34,000 over the prior 12 months. In July, employment declined in local government education and retail trade. Employment continued to trend up in health care.”
Most of the decline came from local government education, which lost 50,000 jobs after showing little net change during the previous year. Retailers cut another 19,000 positions, including losses at warehouse clubs, supercenters, general merchandise stores, gas stations, and fuel dealers.
Financial activities lost 14,000 jobs. Employment in that sector has fallen by 121,000 since reaching a recent peak in May 2025.
Healthcare provided one of the few substantial gains, adding 22,000 jobs. That was still below the industry's average monthly increase of 36,000 over the previous year. Manufacturing added 5,000 jobs, slightly exceeding economists' expectations. Leisure and hospitality shed 40,000 jobs in July, bringing its two-month decline to 83,000, a figure analysts noted was distorted by seasonal adjustment noise during the World Cup.
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The report also retroactively gutted recent gains in the BLS' reports. May's reported gain was cut from 129,000 to 63,000, while June was revised from 57,000 to 20,000, erasing 103,000 jobs from two months that had looked like a rebound.
Before the July report, the three-month average had appeared to be roughly 111,000. The revisions collapsed that figure to approximately 20,000 jobs per month, making the spring rebound look far less substantial.
The labor force participation rate remained at 61.4 percent in July, but it has fallen by 0.7 percentage points since January. The employment-to-population ratio stood at 58.9 percent, down half a percentage point over the same period. Temporary layoffs increased by 153,000 to 921,000.
The Bureau of Labor Statistics reported on wages:
In July, average hourly earnings for all employees on private nonfarm payrolls, at $37.62, were little changed (+2 cents). Over the year, average hourly earnings have increased by 3.2 percent.
Elevated energy prices tied to ongoing military activity against Iran near the Strait of Hormuz have weighed on both hiring and consumer costs throughout the summer. The weak numbers handed the Federal Reserve a complicated picture ahead of its September meeting. Traders shifted their bets after the report, putting a 56 percent probability on rates holding steady, but with inflation data due next week, the jobs report may not be the last word.
Editor’s Note: Thanks to President Trump’s leadership and bold policies, America’s economy is back on track.
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