U.S. payrolls drop 23,000 jobs in July, unemployment 4.1%

The U.S. economy unexpectedly lost 23,000 jobs in July, a sharp reversal from expectations of significant gains and a sign of a cooling labor market, according to a report from the Bureau of Labor Statistics released on Friday, August 7. The unemployment rate ticked down to 4.1% from 4.2% in June, but that decline was driven by a drop in the labor force participation rate, which fell to 61.4%, its lowest level in over five years.

The payroll loss, which followed a downwardly revised gain of just 20,000 jobs in June, was far below economist forecasts that had called for an increase of between 80,000 and 95,000 positions. The report was further weakened by substantial revisions to prior months; the government revised May's job gain down by 66,000 to 63,000 and June's down by 37,000 to 20,000, meaning combined employment for those two months was 103,000 lower than previously reported.

Job losses were concentrated in several sectors. Local government education shed 50,000 positions, while retail trade lost 19,000 jobs. Financial activities employment fell by 14,000, continuing a downward trend. Health care was a bright spot, adding 22,000 jobs, but that pace was slower than its...