US economy loses 23,000 jobs in July as wage growth hits five-year low and hiring stalls outside healthcare

USA: The US labour market took an unexpected turn in July, with the economy shedding 23,000 jobs, far below economists’ forecast of a 95,000-job gain and a sharp reversal from June’s already weak performance, according to data released Friday by the Bureau of Labor Statistics, as reported by CNN.

The unemployment rate fell to 4.1% from 4.2%, but the drop reflected more people leaving the workforce entirely rather than finding jobs. Workers’ pay rose just 0.1% from June, pushing the annual wage growth rate to 3.2%. This is a five-year low that leaves average paychecks fully eroded by inflation running at 3.5%.

The bigger picture is worse than July alone

As CNN reported, the July figures landed alongside significant downward revisions to prior months. June’s job gains were revised down to 20,000 from 57,000. May’s figure was essentially halved, dropping to 66,000 from 129,000. Over the past three months, average job gains have come in at just 20,000.

“This was a bleak report, and it signals the labor market is stalling again,” Heather Long, chief economist at Navy Federal Credit Union, told CNN. “The past three months have seen 20,000 average job gains — no matter how you look at it, that’s anemic.”

Where the jobs are

Healthcare and social assistance remained the dominant source of employment, adding an estimated 22,600 jobs. As Wells Fargo chief economist Tom Porcelli told CNN: “Healthcare has just been a printing press of jobs. But if you strip that out from private employment, the cyclical hiring was only 7,000 jobs. The backdrop is still incredibly uneven.”

Professional and business services added 18,000 jobs and the information sector added 11,000, with construction and parts of manufacturing also contributing. These seem to be areas that benefit from the AI and data centre investment boom. But those gains were offset by significant losses in local government, particularly school districts, and in leisure and hospitality.

Leisure and hospitality shed 40,000 jobs in July, following a 43,000 loss in June. This was a puzzling outcome given the FIFA World Cup running across 11 US cities during this period. As CNN reported, economists including Gus Faucher of PNC Financial Services noted the difficulty in reconciling those losses with the tournament’s presence, suggesting seasonal adjustment methodology may be distorting the underlying picture.

Similarly, the 49,600 jobs lost from local school districts are likely a statistical artifact of seasonal adjustment rather than genuine losses, with those positions expected to return when schools reopen for the new year.

Netizens react

The jobs report drew sharp responses online, with many commenters questioning both the figures themselves and the official narrative surrounding them.

Several pushed back on the framing of the result as unexpected. “Unexpected to whom?” one commenter wrote. Another was more direct: “They aren’t clueless, don’t give them that. They simply do not care.”

Distrust of the official numbers ran through much of the thread. “If they’re saying 23,000 it’s probably 33,000,” one commenter noted sceptically. Another pointed to the pattern of downward revisions as evidence that the headline numbers consistently overstate actual conditions: “News media was gaslighting everyone last month talking about a recovering labour market and then oops, whaddaya know, turns out that was [expletive] just like everyone knew it was.”

Others connected the data to what they were observing in real life. “Not a surprise. Anyone reading the news on a daily basis can see the mass layoffs going across the country. Combined with the made-up numbers coming from the Fed,” one commenter wrote.