Job growth in the U.S. slowed much more than expected during July and the unemployment rate ticked higher, the Labor Department reported Friday.
Nonfarm payrolls grew by just 114,000 for the month, down from the downwardly revised 179,000 in June and below the Dow Jones estimate for 185,000. The unemployment rate edged higher to 4.3%, its highest since October 2021.
Average hourly earnings, a closely watched inflation barometer, increased 0.2% for the month and 3.6% from a year ago. Both figures were below respective forecasts for 0.3% and 3.7%.
Stock market futures added to losses following the report while Treasury yields plunged.
The report adds to mixed signals recently about the economy and with financial markets on edge about how the Federal Reserve will respond. The labor market had been a pillar of economic strength but has recently shown some trouble signs, and the July payrolls increase was well below the average of 215,000 over the past 12 months.
From a sector standpoint, health care again led in job creation, adding 55,000 to payrolls. Other notable gainers included construction (25,000), government (17,000) and transportation and warehousing (14,000). Leisure and hospitality, another leading gainer over the past few years, added 23,000.
The information services sector posted a loss of 20,000.
While the survey of establishments used for the headline payrolls number was discouraging, the household survey was even more so, with growth of just 67,000, while the ranks of the unemployed swelled by 352,000. The labor force also contracted by 214,000, though the participation rate as a share of the working-age population actually edged higher to 62.7%.
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