US Economy Loses 23,000 Jobs in July; Labor Force Participation Drops Sharply
Theo Al Jazeera Staff
The US economy lost 23,000 jobs in July, with the labor force participation rate falling to a five-year low of 61.4%. Job declines were widespread, including retail, hospitality, and government, while healthcare added positions.
The latest jobs report released by the US Bureau of Labor Statistics on Friday showed the economy lost 23,000 jobs in July, while the unemployment rate fell from 4.2% to 4.1%.
However, the drop in unemployment was partly driven by a decline in the labor force participation rate—the percentage of people working or actively looking for work. That rate fell to 61.4%, the lowest in five years, and excluding the economic impacts of the COVID-19 pandemic, it was the lowest in five decades.
About 264,000 people left the workforce, meaning they were no longer working or seeking employment.
The retail sector lost 19,000 jobs overall, with warehouse clubs and large retailers hit hardest, shedding 21,000 jobs, along with 5,000 jobs at gas stations. Those losses were partially offset by growth at specialty stores such as music and sporting goods shops, which added 10,000 jobs.
Amid the peak summer travel season, the economy also saw job losses in entertainment and hospitality, with 40,000 jobs lost, including 26,000 cuts in food services and drinking places.
The largest decline came from the government sector, which lost 53,000 jobs, primarily in local education, which shed 49,000 positions.
In contrast, healthcare added 22,000 jobs, driven by outpatient care services, which gained 18,000 positions.
June job figures were also revised downward to just 20,000 jobs, lower than the initial estimate.
The jobs report comes amid a labor market described as "low hiring, low firing," meaning workers are not leaving their current jobs in large numbers to seek new positions.
According to the Job Openings and Labor Turnover Survey (JOLTS) released Tuesday, job openings dipped slightly from 7.5 million to 7.4 million in May, while hiring remained steady at 5.3 million.
Experts say recent reports point to an economy in distress, contributing to declining consumer confidence among Americans. Mark Zandi, chief economist at Moody's Analytics, remarked on social media: "The main message from the July jobs report is undeniable—the economy is struggling." He pointed to the drop in labor force participation as a "clear sign" of a weak job market.
"Although the unemployment rate is low, it's only because those who lost their jobs are dropping out of the labor force, too discouraged to look for new work, as few businesses are hiring," Zandi explained. With wage growth slower than inflation, he added: "No wonder most Americans say they are unhappy with their finances and the economy's performance."
The jobs report also influenced expectations for the Federal Reserve's interest rate decisions. Analysts increasingly believe the US central bank will hold rates steady at its September policy meeting. The CME Group's FedWatch tool now puts the probability of rates staying unchanged at 56%, up from 45% on Thursday. The Fed had left its benchmark rate at 3.50-3.75% last month.
Despite the jobs numbers, US stock markets were trending higher. The Nasdaq rose 0.9%, the S&P 500 gained 0.5% from opening, and the Dow Jones added 0.3% in midday trading. Gold—often seen as a safe-haven investment during economic uncertainty—climbed 2.2% to $4,336.09 per ounce.
