US economy loses 23,000 jobs in July, raises concerns for job seekers

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The United States labour market suffered an unexpected setback in July, with the economy losing 23,000 jobs amid signs that employers are becoming increasingly cautious about hiring.

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The latest figures, released Friday by the Bureau of Labor Statistics, came well below economists’ expectations of a 95,000-job increase.

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Despite the job losses, the unemployment rate fell slightly to 4.1 per cent from 4.2 per cent, as more people exited the labour force.

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The July figures represented a sharp deterioration from June, whose employment gains were revised down to 20,000 from the previously reported 57,000.

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May’s employment gains were also significantly revised, falling to 66,000 from 129,000.

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The latest figures add to concerns about the health of the US labour market, which had appeared to be stabilising after recording weak employment growth in 2025.

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The labour market has remained in what has been described as a “low-hire, low-fire” environment, leaving fewer opportunities for people searching for work.

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Economists say employers are facing several pressures, including an ageing population, the rapid adoption of artificial intelligence, higher oil prices, policy uncertainty and the war with Iran.

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Nicole Bachaud, a labour economist at ZipRecruiter, said employers could be becoming more reluctant to recruit amid economic uncertainty.

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“Price volatility may be contributing to increased hesitation from employers,” Nicole Bachaud, labor economist at ZipRecruiter, wrote in a note Friday. “With job opportunities remaining scarce, more workers are exiting the labor market entirely.

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Healthcare leads job growth

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Job creation was also uneven across sectors, with healthcare and social assistance accounting for most of the gains.

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The sector added an estimated 22,600 jobs in July, making it the largest job creator during the month.

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However, several other sectors recorded significant losses.

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Local government employment fell by 57,000 jobs, while the leisure and hospitality sector lost 40,000 jobs in July, following a decline of 43,000 positions in June.

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Wage growth also slowed during the month.

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Average hourly earnings increased by just 0.1 per cent from June, pushing the annual wage growth rate down to 3.2 per cent — its lowest level in five years.

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The weaker wage growth comes as inflation remains elevated, with the latest Consumer Price Index showing inflation at 3.5 per cent.

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The combination of slower hiring, weak wage growth and persistent inflation could make conditions more challenging for workers and job seekers in the US.

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