U.S. nonfarm payrolls unexpectedly fell by 23,000 in July, driven mainly by a loss of 53,000 government jobs due to seasonal factors, while private payrolls actually rose by 30,000. The unemployment rate declined to 4.1%, but this figure was misleading as it reflected a shrinking labor force rather than genuine job gains. The participation rate fell to 61.4%, now down 0.7 percentage points this year with nearly 1.4 million people having left the workforce, marking its lowest level in 50 years outside the Covid era. Markets interpreted the report as removing a September rate hike from the table, though the Fed may focus more on next Wednesday’s CPI inflation reading than on these mixed labor signals.
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