The nation’s unemployment rate declined in July, even as government continued to shrink, the Commerce Department’s Bureau of Labor Statistics (BLS) reported Friday.
The seasonally-adjusted unemployment rate fell to 4.1%, down from 4.2% in June, as the number of unemployed declined by 178,000 from 7.1 million to 6.9 million. “Both the labor force participation rate, at 61.4 percent, and the employment-population ratio, at 58.9 percent, changed little in July,” BLS reported.
The private sector added 30,000 jobs in July, largely thanks to a 22,000 growth in the health care sector. Meanwhile, the number of government jobs shrank by 53,000, due to the number of local government jobs falling 57,000.
While the total national loss of 23,000 jobs in the month bucked analysts’ predictions of growth, it sent stock markets higher in early trading by easing concerns that the Federal Reserve will increase interest rates. Revisions reported Friday subtracted 66,000 jobs from May’s total and 37,000 from June’s count.
“This morning’s report is a game changer in the sense that all of the recent focus has been on inflation and this report highlights the risks that are embedded in the labor market as well,” Northlight Asset Management Chief Investment Officer Chris Zaccarelli told CNBC:
“Before today, many were expecting that the Fed had no choice but to raise rates in order to fight stubbornly high inflation, because the job market was so strong, but this report shows that isn’t the case.”
By sector, notable over-the-month gains were recorded in construction (+22,000), health care (also +22,000), information (+11,000), transportation and warehousing (+9,600) and manufacturing (+5,000). A 19,400 job loss in retail trade was the major drag on employment. Compared to July of 2025, however, the number of people employed in retail was unchanged at 15,441,000.
"If you throw out the World Cup and the government workers, we actually have a number that was about plus-100,000,” National Economic Council Director Kevin Hassett told Fox News on Friday, reacting to Friday’s report:
“There's so many other factors, like manufacturing booming, capital spending booming, real wages growing for the typical manufacturing worker at almost $4,000 since President Trump took office, after adjusting for inflation. “So, there’s all these strong numbers out there.”
NEC Director Kevin Hassett on the jobs report: "If you [take] out the World Cup and the government workers, we actually had a number that was about +100,000... there's so many other factors like manufacturing booming, capital spending booming, real wages growing for the typical… pic.twitter.com/8a6XcGbfMM
— Rapid Response 47 (@RapidResponse47) August 7, 2026
