U.S. sheds 23,000 jobs in 'bleak' July report

Employment in local government education declined by 50,000 in July, a key driver of July's numbers. 

The retail trade industry lost 19,000 jobs in July. Financial activities employment also decreased by 14,000 in July, reflecting a downward trend since the its most recent peak of 121,000 jobs in May 2025. 

The healthcare industry only added jobs at a moderate rate in July, contributing toward the overall decline in the economy. The healthcare sector only added 22,000 jobs, less than the average monthly gain of 36,000 over the last year. 

Heather Long, chief economist at Navy Federal, said the report was "surprisingly bad" and fell below economists expectations of an 80,000 job increase. 

"This is a bleak July jobs report," Long said. 

While the unemployment rate went down slightly, Long said it was due to more than 260,000 people leaving the labor force. 

Wage growth also fell to 3.2%, the lowest rate in five years. Long said this growth is "wiped out" by high inflation. The inflation rate for June was 3.5%, down 0.7% from the previous month; the July figure is due for release on Wednesday from the U.S. Labor Department.

The labor force participation rate was 61.4%, the lowest since February 2021. 

"The Fed's job just got a lot harder," Long said. "The labor market is stalling again. Many industries shedding jobs or flat." 

Chris Zaccarelli, chief investment officer at Northlight Asset Management, said the release of inflation data next week will be key to determine how the Federal Reserve will move forward. 

"If the data continues to come in higher than expected, it could raise the probability of a rate hike at the Fed’s next meeting – but today’s jobs numbers should be enough to keep the Fed on hold for at least another meeting, which all things being equal is a positive for the stock market," Zaccarelli said. 

The central bank’s benchmark interest rates, unchanged since a 0.25% reduction in December, last week were kept in the target range of 3.5% to 3.75%. Three committee members dissented, a signal that change could be in the offing to address inflation.