US Job Market Stalls in July as Employers Cut 23,000 Jobs

The United States job market hit a rough patch in July, as employers cut 23,000 jobs across the country. The news came as a surprise to experts, who had expected businesses to add close to 100,000 jobs that month. The report was released by the Labor Department on a Friday, just under three months before important midterm elections.

The job losses were spread across several industries. Public schools cut 50,000 jobs, restaurants and bars cut 26,000, and retailers lost 19,000 positions. On the brighter side, construction companies added 22,000 jobs and factories added 5,000, which the White House pointed to as a sign of progress.

The unemployment rate dropped to 4.1%, but economists said it fell for the wrong reason. About 264,000 people simply stopped looking for work, which means they were no longer counted as unemployed. When fewer people are searching for jobs, the unemployment rate can fall even if the job market isn't truly improving.

The report was a political problem for President Trump. His administration has placed heavy taxes, called tariffs, on goods from other countries to protect American businesses and create jobs at home. The White House said the plan was still working, pointing to gains in manufacturing, but the overall numbers told a harder story.

The Federal Reserve, the country's central bank, now faces a tough choice about interest rates. It has been thinking about raising rates to slow down inflation, which is when prices for things like food and gas go up too fast. But a weak job market makes it harder to raise rates, since doing so can make borrowing money more expensive and slow the economy down even more.

Pay raises also slowed down in July. Workers' average hourly wages grew by just 3.2% compared to a year ago, the smallest increase in several years. At the same time, the cost of living remains high, partly because of rising energy prices tied to fighting in the Persian Gulf, so many families are still struggling to keep up with their bills.

Women lost 32,000 jobs in July, making up all of the losses for that month. Over the past 12 months, though, women have still gained 321,000 jobs overall, while men have lost about 5,000 jobs in that same period. Economists noted that private businesses kept hiring in July and said the big drop in school jobs might have been a counting error tied to seasonal data.

For people who already have jobs, the situation feels fairly secure, as layoffs are low compared to past years. Many companies are holding on to their workers because they remember how hard it was to hire enough people after COVID-19 lockdowns ended. But for people trying to find a new job or enter the workforce for the first time, the search has become much tougher.

So far in 2026, employers have added an average of just 61,000 jobs per month, well below the 166,000-per-month average seen in 2023 and 2024. Researchers at the Federal Reserve Bank of San Francisco found that getting hired has become harder than expected, even for people with college degrees in their prime working years. They suggested the slowdown might be connected to immigration policy changes, fewer hires at tech companies, or early signs of bigger trouble ahead in the job market.