United States: Employment sees surprise fall in July
Latest reading: The U.S. economy unexpectedly lost 23,000 jobs in July 2026, following a gain of 20,000 in June and falling well short of expectations for an 80,000 increase. Employment figures for May and June were also revised down.
In July, local government education employment fell by 50,000, while retail trade employment declined by 19,000 and employment in financial activities decreased by 14,000.
Meanwhile, the unemployment rate fell to an over-one-year-low of 4.1% as a result of people leaving the labor force; the labor force participation rate declined to its lowest since 2021.
Panelist insight: Digging into the data, TD Economics’ Thomas Feltmate said:
“Overall, this was a soft report, but perhaps not as dire as suggested by the headline payrolls print. The sharp decline in local government hiring is unlikely to be repeated next month, while some of the pullback in leisure & hospitality could be related to giveback following stronger hiring ahead of the World Cup. Moreover, the large downward revisions to prior months reinforce our view that hiring earlier in the year had been overstated. After the revisions, monthly payroll gains are now running closer to the breakeven rate.”