U.S. employers cut 23,000 jobs in July as unemployment falls to 4.1%

Washington, August 7, 2026: US employers unexpectedly shed 23,000 jobs in July, while revisions by the Labor Department reduced previously reported payroll gains for May and June by a combined 103,000. The unemployment rate fell to 4.1 per cent, largely because fewer Americans remained in the labour market.July Payrolls Defy ForecastsThe latest Labor Department figures marked a sharp deterioration in the US labour market and dealt a political setback to President Donald Trump, with the Republican Party seeking to retain control of Congress in the midterm elections.Economists had forecast that employers would add nearly 100,000 jobs in July. Instead, local public schools shed 50,000 jobs, restaurants and bars lost 26,000 positions, and retailers cut 19,000.THE JOBS REPORT JUST CLEARED THE PATH FOR RATE CUTSThe economy lost 23,000 jobs in July against expectations of a 85,000 gain.- Nonfarm payrolls: -23K vs +85K expected- Private payrolls: +30K vs +78K expected- Average hourly earnings: +0.1% vs +0.3% expected- Unemployment… pic.twitter.com/5qEef5IEJQ— World Monitoring Center (@WMC_WORLD) August 7, 2026The unemployment rate of 4.1 per cent was the lowest since June 2025. However, 264,000 people left the labour market, reducing the proportion of Americans working or seeking employment to 61.4 per cent, its lowest level since February 2021.The Trump administration highlighted gains in sectors targeted by its economic policies. Construction companies added 22,000 jobs and factories gained 5,000.“The Trump industrial resurgence is on schedule. Manufacturing and factory construction jobs grew again in July even as government payrolls continued to significantly shrink,” White House spokesman Kush Desai said.Hiring had recovered this year following a weak 2025, but the conflict in the Persian Gulf has driven up energy prices and put additional pressure on household budgets. Some employers are struggling to fill vacancies, while others are increasingly relying on technology to perform work previously done by employees.Fewer Americans Remain In WorkforceWorkers who already have jobs continue to enjoy relatively strong job security, with layoffs remaining low by historical standards. Companies remain cautious about reducing staff after experiencing labour shortages following the Covid lockdowns.During one week in July, the number of Americans applying for unemployment benefits fell to its lowest level in more than 50 years. However, those who lose their jobs or are entering the labour market for the first time are finding it increasingly difficult to secure employment.Economists have described the situation as “no hire, no fire”.Employers have added an average of 61,000 jobs a month so far this year, compared with 9,700 in 2025, which was the weakest annual pace outside a recession since 2002.The US economy also needs fewer new jobs than previously to prevent unemployment from rising. Trump’s immigration crackdown and the continuing retirement of baby boomers have reduced the number of people available for work. A Federal Reserve study suggests the monthly “break-even” hiring rate, which stood at 155,000 in 2023–2024, may now be close to zero.“There are just fewer people available to hire,” BMO Capital Markets senior economist Sal Guatieri said.Labour shortages have also contributed to stronger wage growth for some employees. Payroll processor ADP reported that workers who changed jobs in July received a 7 per cent year-on-year pay increase, the largest in nearly a year, compared with a 4.4 per cent rise for those who remained with their employers.Companies are simultaneously becoming more productive by using technology to perform tasks previously handled by workers.“We are seeing companies produce more with their current staff,” Guatieri said. “So there’s less need to take on new workers.”Shortages of workers and productivity gains, he added, “will keep the lid on the rate of hiring and monthly job growth.”War, AI Cloud Hiring OutlookThe outlook remains uncertain as fighting in the Persian Gulf pushes up energy costs and squeezes household budgets. The increasing adoption of artificial intelligence also poses an uncertain impact, potentially improving worker productivity and wages or replacing some jobs.Researchers Ingrid Chen, Marianna Kudlyak, and Riva Mikhlin of the Federal Reserve Bank of San Francisco found that securing employment has become unexpectedly more difficult over the past two years.More than six years after the last recession, employers would normally be expected to draw younger and less-educated workers into employment as demand for labour increases. The researchers found that this has not happened.“Instead of being pulled in, the pipeline into employment is shrinking such that the recovery is no longer reaching workers at the margins,” Chen, Kudlyak, and Mikhlin wrote.Also Watch: US President Donald Trump Signs New Executive Orders To Restrict Birthright Citizenship After Supreme Court Setback | VIDEOEven unemployed Americans aged 25 to 54 and those with college degrees, groups that typically return to employment relatively quickly, are struggling to find jobs.The researchers said the reasons remained unclear, but possible factors included the immigration crackdown, slower hiring by technology companies and government contractors, uncertainty over government policy, or “early signals of broader labour market deterioration.”To get details on exclusive and budget-friendly property deals in Mumbai & surrounding regions, do visit: https://budgetproperties.in/

U.S. employers unexpectedly cut 23,000 jobs last month, and Labor Department revisions shaved 103,000 jobs off payrolls in May and June. The unemployment rate dipped to 4.1% only because Americans left the job market.The July jobs numbers from the Labor Department on Friday marked a sharp reversal for the American labor market and a setback for President Donald Trump less than three months before his Republican party seeks to keep full control of Congress in the midterm election.Forecasters had expected job creation to approach 100,000 last month.Local public schools cut 50,000 jobs in July, restaurants and bars 26,000, and retailers 19,000.The 4.1% unemployment rate was the lowest since June 2025—but it dropped for the wrong reasons: Fewer people were competing for work, as 264,000 dropped out of the labor market. The share of those working or looking for work fell to 61.4%, the lowest since February 2021.Hiring had rebounded this year from a lackluster 2025 in the face of the conflict in the Persian Gulf that has sent energy prices surging and put a strain on family budgets. Job growth had been solid, if unspectacular. Some businesses are having trouble filling vacancies. Others are using technology to do the work humans used to do.Americans who have jobs are enjoying unusual job security. Layoffs are low by historical standards. Companies, scarred by the surprise labor shortages that followed COVID-19 lockdowns a few years ago, don’t want to risk giving up the staff they have.One week in July the number of Americans filing for unemployment benefits dropped to the lowest level in more than 50 years. The jobless rate tumbled to 4.2% in June, the lowest in a year until the July figure came out.But Americans who have lost their jobs—or are seeking to bust into the job market for the first time—are struggling to catch a break.Economists have used the term “no hire, no fire” to describe the unusual job market conditions.So far this year, employers are adding 61,000 jobs a month, up from 9,700 in 2025, the weakest outside a recession since 2002.The United States doesn’t need as many jobs as it used to keep the unemployment rate from rising. Trump’s immigration crackdown and the retirement of baby boomers mean fewer people are competing for work. So the break-even rate of monthly hiring, 155,000 in 2023-2024, has dropped, perhaps to nearly zero, according to a Federal Reserve study.“There are just fewer people available to hire,” said Sal Guatieri, senior economist at BMO Capital Markets. For some, labor shortages translate into higher wages. The payroll processor ADP reported Wednesday that people who changed jobs last month pocketed a 7% raise, the biggest year-over-year gain in almost a year and a premium over a 4.4% increase for workers who stayed where they were.At the same time, companies have become more productive in recent years, using technology to do the work that humans used to do. “We are seeing companies produce more with their current staff,” Guatieri said. “So there’s less need to take on new workers.”Shortages of available workers and rising productivity, he said, “will keep the lid on the rate of hiring and monthly job growth.”In a report out this week, the researchers Ingrid Chen, Marianna Kudlyak, and Riva Mikhlin of the Federal Reserve Bank of San Francisco found that landing a job has gotten tougher in the past couple of years—surprisingly so.Normally, this deep into an economic expansion—it’s been more than six years since the last recession—employers would need workers so badly that they’d be taking chances on young people and on those with less education. Not this time. “Instead of being pulled in, the pipeline into employment is shrinking such that the recovery is no longer reaching workers at the margins,” Chen, Kudlyak, and Mikhlin write.Moreover, the unemployed people who normally get back to work the fastest—those in their prime working years (25 to 54) and with college educations—are struggling to find new jobs. The San Francisco Fed researchers aren’t sure what’s making the job search so tough. They suspect it might have to do with the immigration crackdown, hiring slowdowns specifically at tech companies and government contractors, uncertainty over the direction of government policy, or “early signals of broader labor market deterioration.” —Paul Wiseman, AP Economics Writer