Non-farm payrolls unexpectedly drop in July, unemployment rate dips

7th Aug 2026 12:00

(Sharecast News) - The US economy unexpectedly shed jobs in July, according to data released on Friday by the Bureau of Labor Statistics, making a September rate hike by the Federal Reserve unlikely.

Non-farm payrolls fell by 23,000 following a revised 20,000 increase in June, missing consensus expectations for an 80,000 increase. June's figure was revised down from a 57,000 jump, while May's figure was revised down from a 129,000 gain to a 63,000 increase.

The BLS said employment declined in local government, education and retail trade. Employment continued to trend up in healthcare, however.

Meanwhile, the unemployment rate dipped to 4.1% last month from 4.2% in June, versus expectations for it to be unchanged.

Average hourly earnings rose just 2 cents, taking the 12-month average to 3.2%, missing expectations for a 3.5% increase.

ING analyst James Knightley said: "Reaction has been significant, with 2Y yields down 8bp and the dollar softening, while Fed funds futures contracts are now only pricing 10bp of a potential 25bp hike on 16 September.

"Today's outcome supports our call for a prolonged pause from the Federal Reserve, but remember that ahead of the September FOMC meeting we have a further jobs report, two inflation prints and the Federal Reserve's Jackson Hole Symposium."