US Shed 23,000 Jobs in July; May-June Cut 103K
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- Bureau of Labor Statistics reported nonfarm payrolls fell 23,000 in July, confounding economists' forecasts for an 80,000 increase and ending a period of modest gains
- May and June payrolls were revised down by a combined 103,000 jobs, compounding July's weakness and following last year's pattern of sharp prior-month downgrades
- Unemployment rate fell to 4.1% from 4.2% — but only because 264,000 people left the labor force, pushing the participation rate to a near 5-1/2-year low of 61.4%
- Federal Reserve September rate-hike odds dropped to 43.9% from 57% on the LSEG data, though three FOMC members had already dissented at the prior meeting in favor of a quarter-point hike
- Local government education drove the July decline with a 50,000-job drop, while retail shed 19,000 (concentrated at warehouse clubs and supercenters) and financial activities lost 14,000 — the latter down 121,000 since peaking in May 2025
- Healthcare added 22,000 jobs, well below its 36,000 monthly average over the past year, while construction and manufacturing were little changed
- Donald Trump fired BLS commissioner Erika McEntarfer last year after similar sharp downward revisions to prior-year data, accusing her without evidence of manipulating the figures
Why it matters: Markets had priced a 57% chance of a September Fed rate hike before the report; after the data, that fell to 43.9%, materially shifting the policy calculus even as three FOMC members already dissented in favor of tightening. The headline-grabbing drop in unemployment to 4.1% is misleading — it reflects a 264,000-worker exodus from the labor force, not improved job prospects.
