The US economy unexpectedly lost 23,000 jobs last month

 

A job seeker meets with a recruiter during the HIRE360 Diversity Hiring Expo & Mega Career Expo at the Carson Event Center on June 30, 2026, in Carson, California.

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A summer hiring slump dogged the US labor market in July as the economy unexpectedly lost 23,000 jobs, according to new data released Friday by the Bureau of Labor Statistics.

The unemployment rate dropped to 4.1% from 4.2% as more people left the labor force.

July’s job gains marked a sharp slowdown from June’s total, which was downwardly revised to 20,000 from 57,000. Following revisions, the jobs created in May were essentially halved, dropping to 66,000 from 129,000. Workers’ pay gains slowed to a five-year low.

The July report fell far short of economists’ expectations for a 95,000-job gain.

It’s always cautioned that one month does not make a trend, and initial economic data snapshots are rarely that clean cut – especially post-pandemic and especially during periods of high uncertainty.

However, when accounting for the nuance in July’s report (more on that below) and putting it in the context of recent months’ data, the labor market remains low-momentum, uneven and one where pay growth can’t keep up with faster-rising prices.

“This was a bleak report, and it signals the labor market is stalling again,” Heather Long, chief economist at Navy Federal Credit Union, told CNN. “You can explain away a few things for July and a few things for June; but if you step back and look at the bigger picture, the past three months have seen 20,000 average job gains – no matter how you look at it, that’s anemic.”

Friday’s report adds to signs that employers are becoming more cautious about hiring as they navigate growing headwinds, which include an aging population, the rapid adoption of AI, higher oil prices, policy uncertainty and the war with Iran.

Which industries added jobs

The job market has been firmly lodged in a “low-hire, low-fire” dynamic that has left few opportunities for job seekers.

“Price volatility may be contributing to increased hesitation from employers,” Nicole Bachaud, labor economist at ZipRecruiter, wrote in a note Friday. “With job opportunities remaining scarce, more workers are exiting the labor market entirely.”

The hiring that is happening also isn’t broad-based, with the bulk coming from just one sector: healthcare and social assistance. That was the case again last month, when that sector added an estimated 22,600 jobs.

“Healthcare has just been a printing press of jobs,” Tom Porcelli, chief economist at Wells Fargo, told CNN in an interview. “But if you strip that out from private (employment, which was up 30,000 jobs in July), the cyclical hiring was only +7,000 jobs. The backdrop is still incredibly uneven.”