July Job Market: Key Sectors Decline Amid Overall Modest Growth

The U.S. labor market slowed sharply in July, with significant job losses in the information and financial sectors.

The information services sector was hit particularly hard, losing 20,000 jobs. In addition, the professional and business services sector saw payrolls fall by 1,000, while financial activities saw a reduction of 4,000 jobs.

“These sectors typically generate higher-wage, higher-quality jobs,” said Julia Pollak, chief economist at ZipRecruiter. “The labor market is no longer simply normalizing. A continued deterioration could lead to a negative cycle of job losses, reduced consumer spending, lower corporate revenues and further job cuts.”

Overall, nonfarm payrolls rose just 114,000 for the month, falling short of the Dow Jones estimate of 185,000. The unemployment rate rose to 4.3%, its highest level since October 2021.

Despite these challenges, there have been some areas of growth:

• Health care: This sector led job creation, with an increase of 55,000 positions.
• Construction: 25,000 jobs added.
• Government: Increase of 17,000 jobs.
• Transport and storage: It recorded an increase of 14,000 jobs.
• Free time and hospitality: It continued its positive trend by adding 23,000 jobs.

“The latest data points to a slowdown rather than a recession, but early warning signs suggest the potential for further weakening,” noted Jeffrey Roach, chief economist at LPL Financial.