Hiring in the U.S. decelerated notably last month, particularly in the information and financial sectors which saw job losses.
In July, the information services sector showed significant weakness, reporting a loss of 20,000 jobs. Professional and business services, as well as financial activities, also experienced declines in payrolls, with 1,000 and 4,000 job losses, respectively.
Julia Pollak, chief economist at ZipRecruiter, noted that these sectors are known for generating higher-wage, higher-quality jobs. She expressed concern, stating, “The labor market is clearly no longer normalizing. Further deterioration could trigger a negative cycle of job losses, reduced consumer spending, declining business revenues, and more job cuts.”
Nonfarm payrolls expanded by only 114,000 in the month, falling well short of the Dow Jones estimate of 185,000. The unemployment rate rose to 4.3%, its highest level since October 2021.
Despite the overall slowdown, there were some positive developments. The healthcare sector continued to lead in job creation, adding 55,000 jobs. Other sectors that saw gains included construction (25,000), government (17,000), transportation and warehousing (14,000), and leisure and hospitality (23,000).
Jeffrey Roach, chief economist at LPL Financial, commented, “The most recent labor market data indicates a slowdown rather than a recession. However, early indicators suggest a potential for further weakness.”
