US Economy Unexpectedly Lost 23,000 Jobs in July

The losses were concentrated in a handful of sectors. Local government education accounted for a 50,000 decline, which analysts attribute partly to a seasonal quirk in how summer school vacations are measured. Retail trade shed 19,000 positions, leisure and hospitality 40,000, and financial activities 14,000. Construction bucked the trend, adding 22,000 jobs, and health care grew by 22,000 — well below its average monthly gain of 36,000 over the previous year. Interpretations diverge sharply. The White House emphasized the falling jobless rate and factory hiring, with spokesman Kush Desai saying the administration's agenda of tax cuts and deregulation was delivering an industrial resurgence. Daniel Zhao, chief economist at the jobs site Glassdoor, offered a bleaker reading, noting that his firm's worker confidence index had slumped to a record low as employees felt frozen out of the market.

Attention now turns to the Federal Reserve (the Fed), the country's central bank, which must weigh a cooling labor market against inflation still running at an annual rate of 3.5%. Interest rates were held between 3.5% and 3.75% last month, and the new chair, Kevin Warsh, has stressed his determination to bring prices down while offering little guidance about future moves. Analysts said the weak data had scaled back expectations of a rate rise in September; stock markets climbed on the news, with the S&P 500 (Standard & Poor's 500) index closing at a record high. Wages offered little comfort, rising 3.2% over the year, slower than forecast and unlikely to keep pace with prices now that gasoline has returned to above $4 a gallon. The Consumer Price Index (CPI) due on 12 August will shape the Fed's next decision.