- A new Labor Department report shows U.S. employers trimmed job rolls by 23,000 in July.
- The tally fell far short of economists' expectations of at least 80,000 new positions for the month.
- The report revised earlier jobs data, dropping average monthly gains to 34,000.
A new jobs report from the U.S. Labor Department came up markedly short of expectations and, along with a set of downward revisions, has cast a murkier shadow over the nation’s employment sector amid a domestic economy already under pressure from persistent inflation and slowing wage growth.
Friday’s Employment Situation Summary finds U.S. employment declined by 23,000 positions in July, far short of the 80,000 or so new jobs predicted by economists ahead of the monthly data release.
While the nation’s unemployment rate ticked down slightly to 4.1%, that reading is mostly a function of a decline in the pool of workers actively seeking job opportunities. Some 264,000 dropped out of the labor market in July, bringing the U.S. labor participation rate down to 61.4%, the lowest since early 2021 and, outside the COVID era, the weakest level since the mid 1970s.
Overall losses for U.S. retail businesses totaled 19,000 jobs in July. Warehouse clubs, supercenters and other general merchandise retailers lost 21,000 last month, while employment rolls for gas stations and fuel dealers declined by 5,000. A handful of retail sectors, including sporting goods, hobby, musical instrument, book and miscellaneous retailers saw moderate gains but retail trade employment, per the new report, has shown little net change over the past 12 months.
The Labor Department also made downward revisions to job totals from May and June, shaving 103,000 from previous reports. The adjustments bring the monthly average job gains over the last year down to 34,000.
“We can’t really put lipstick on a pig here,’' Daniel Zhao, chief economist at the jobs website Glassdoor, told the Associated Press. ”This is not a great report for July.’'
Last month’s annual wage growth of 3.2% reflects the smallest 12-month increase since May 2021 and falls short of U.S. inflation which was running at 3.5% in July, according to the latest federal assessment.
How will the Fed view dismal jobs report?
The U.S. Federal Reserve has stood pat on making any interest adjustments since a series of decisions to raise its benchmark rate to end 2025. Economists have predicted rising chances that the monetary body would make another upward adjustment at its September meeting as U.S. inflation, exacerbated by petroleum market disruptions spurred by the ongoing conflict in the Middle East, continues to run well above the Fed’s 2% target.
“This morning’s report is a game changer in the sense that all of the recent focus has been on inflation and this report highlights the risks that are embedded in the labor market as well,” Chris Zaccarelli, chief investment officer for Northlight Asset Management, told CNBC. “Before today, many were expecting that the Fed had no choice but to raise rates in order to fight stubbornly high inflation, because the job market was so strong, but this report shows that isn’t the case.”
The combination of a weakening labor market, and persistent increases in the cost of consumer goods and services, is piling pressure on household budgets and is a particular burden for those in lower income brackets.
Recent polling by the Deseret News, in partnership with the University of Utah’s Hinckley Institute of Politics, found rising concerns among Beehive State residents.
The survey, conducted in late June, found an overwhelming majority of respondents, 84%, registering some level of concern about the direction of the economy with 41% saying they were very concerned and 43% somewhat concerned about where the economy is headed. On the other side of the sentiment question, 12% of respondents said they were not very concerned and 2% said they were not at all concerned about where the economy is headed.
The latest polling on economic concerns mirrors state and national data gathered by the Deseret News/Hinckley Institute in May where 80% of Utahns and 79% of Americans reported some level of concern about the economic fallout from the Iran war.