US unexpectedly loses jobs in July, in blow to Trump’s economy claims

The US economy unexpectedly shed 23,000 jobs in July, throwing a wrench into President Donald Trump's narrative of an economic turnaround ahead of crucial midterm elections. The unemployment rate slipped to 4.1 percent, according to figures released by the US Bureau of Labor Statistics on Friday. Since assuming office for a second term, Trump has enacted policies aimed at boosting domestic manufacturing and taming inflation.

However, Friday's data presents a challenge for both Democrats, who aim to regain control of Congress, and the Federal Reserve, which seems poised for a rate hike later this year.

Employment declines were reported in the local government education and retail trade sectors. Conversely, the healthcare sector continued its growth pattern. The Bureau of Labor Statistics also adjusted downward job growth from the previous two months by 103,000, indicating a weaker labor market than previously thought. Despite the dip, job growth peaked in March, only to decline in the subsequent three months, culminating in a negative growth rate in June.

The unemployment rate has remained stable throughout this tumultuous labor market, as the shrinking labor supply can be attributed to factors such as an aging population and lower net migration.

In July, the local government education sector experienced a job loss of 50,000. Retail trade also saw a decline of 19,000 jobs, primarily due to job cuts in warehouse retailers such as Costco and Sam's Club, as well as general merchandise stores. The financial activities sector continued its downward trajectory, shedding 14,000 jobs, down 121,000 from its May 2025 peak.

Healthcare, however, has been a bright spot for the US labor market, adding 22,000 jobs in July, though this pace is slower than the average annual gain. Average hourly earnings grew by 3.2 percent compared to the previous year, yet this increase fell short of inflation, leaving workers with diminished real income.