U.S. Employers Cut 23,000 Jobs in July Slump

The United States Department of Labor reported that U.S. employers unexpectedly cut 23,000 jobs in July, missing forecasts of 80,000 to 100,000 new positions. The report included downward revisions of 103,000 jobs for May and June. While the unemployment rate dipped to 4.1%, the decline resulted from 264,000 people dropping out of the labor market rather than actual job growth.

Significant losses occurred in retail, restaurants, and local public schools. Conversely, manufacturing and construction saw modest gains. Wage growth remained anemic, with average hourly earnings rising only 3.2% in July—the weakest gain since May 2021. This growth failed to keep pace with an expected 3.4% increase in the consumer price index, leading to a decline in real wages and purchasing power.

Economic strain is attributed to an energy shock from the U.S.-Iran war, the impact of Liberation Day tariffs, and costs associated with the artificial intelligence boom. These conditions complicate the Federal Reserve's efforts to combat inflation, as Chair Kevin Warsh faces pressure to raise policy rates despite the financial strain on workers.

White House spokesman Kush Desai maintained that the industrial resurgence is on schedule. However, the slump presents a political setback for President Donald Trump ahead of the midterm elections. Some analysts have criticized the reliability of the data, specifically the birth/death model used to estimate new business jobs.