The United States labour market suffered an unexpected setback in July, with the economy losing 23,000 jobs amid signs that employers are becoming increasingly cautious about hiring.
The latest figures, released Friday by the Bureau of Labor Statistics, came well below economists’ expectations of a 95,000-job increase.
Despite the job losses, the unemployment rate fell slightly to 4.1 per cent from 4.2 per cent, as more people exited the labour force.
The July figures represented a sharp deterioration from June, whose employment gains were revised down to 20,000 from the previously reported 57,000.
May’s employment gains were also significantly revised, falling to 66,000 from 129,000.
The latest figures add to concerns about the health of the US labour market, which had appeared to be stabilising after recording weak employment growth in 2025.
The labour market has remained in what has been described as a “low-hire, low-fire” environment, leaving fewer opportunities for people searching for work.
Economists say employers are facing several pressures, including an ageing population, the rapid adoption of artificial intelligence, higher oil prices, policy uncertainty and the war with Iran.
Nicole Bachaud, a labour economist at ZipRecruiter, said employers could be becoming more reluctant to recruit amid economic uncertainty.
“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.
Healthcare leads job growth
Job creation was also uneven across sectors, with healthcare and social assistance accounting for most of the gains.
The sector added an estimated 22,600 jobs in July, making it the largest job creator during the month.
However, several other sectors recorded significant losses.
Local government employment fell by 57,000 jobs, while the leisure and hospitality sector lost 40,000 jobs in July, following a decline of 43,000 positions in June.
Wage growth also slowed during the month.
Average hourly earnings increased by just 0.1 per cent from June, pushing the annual wage growth rate down to 3.2 per cent — its lowest level in five years.
The weaker wage growth comes as inflation remains elevated, with the latest Consumer Price Index showing inflation at 3.5 per cent.
The combination of slower hiring, weak wage growth and persistent inflation could make conditions more challenging for workers and job seekers in the US.
Vanguard News
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