US economy unexpectedly sheds 23,000 jobs in July

U.S. employers unexpectedly cut 23,000 jobs last month, and Labor Department revisions shaved 103,000 jobs off payrolls in May and June. The unemployment rate dipped to 4.1% only because Americans left the job market.

The June jobs numbers from the Labor Department Friday marked a sharp reversal for the American labor market and a political setback for President Donald Trump less than three months before the GOP seeks to keep full control of Congress in the midterm election.

Forecasters had expected job creation to approach 100,000 last month.

Local public schools cut 50,000 jobs in July, restaurants and bars 26,000, retailers 19,000.

The 4.1% unemployment rate was the lowest since June 2025—but it dropped for the wrong reasons: Fewer people were competing for work as 264,000 dropped out of the labor market. The share of those working or looking for work fell to 61.4%, the lowest since February 2021.

The Trump administration, which has imposed massive tariffs in an attempt to create manufacturing jobs, noted that jobs were up 22,000 at construction companies and 5,000 at factories. 

“The Trump industrial resurgence is on schedule. Manufacturing and factory construction jobs grew again in July even as government payrolls continued to significantly shrink,’’ said White House spokesman Kush Desai.

Hiring had rebounded this year from a lackluster 2025 in the face of the conflict in the Persian Gulf that has sent energy prices surging and put a strain on family budgets. Job growth had been solid, if unspectacular. Some businesses are having trouble filling vacancies. Others are using technology to do the work humans used to do.

The Associated Press has the full story.