US Loses 23,000 Jobs in July, Unemployment Rate Falls

Summary

The July US employment report showed a surprise loss of 23,000 jobs versus an expected gain of 80,000, with downward revisions taking 103,000 from the prior two months. The unemployment rate fell to 4.1% as participation dipped. Average hourly earnings rose just 0.1%, reinforcing a disinflationary picture. Bloomberg's Michael McKee explained that seasonal distortions in local government education exaggerated the headline weakness, and the underlying data suggest a robust but slower job market that is not inflationary.

• Nonfarm payrolls unexpectedly fell by 23K in July (estimate +80K), with net two-month revisions of -103K.
• Unemployment rate declined to 4.1% from 4.2%, while labor force participation ticked down to 61.4%.
• Average hourly earnings gained only 0.1% m/m, easing inflation fears; y/y at 3.2%.
• Private payrolls added 30K; manufacturing rose 5K; construction added 22K; retail lost 19K; leisure/hospitality lost 40K for a second month.
• Treasury yields fell sharply at the front end (2-year to ~4.16%) as markets pared near-term Fed tightening expectations.
• Equities rose with small caps (Russell) outperforming, gaining about 0.75% on the data.
• Michael McKee highlighted seasonal distortions from local government education jobs that exaggerated the headline weakness, suggesting the labor market is cooling but still solid and disinflationary.