Washington DC: The US economy is creating fewer jobs than expected, with the employment market performing weaker during the summer than previously thought, according to official figures.
The economy unexpectedly shed 23,000 jobs last month, with declines driven by cuts in local government education and retail roles, despite analysts predicting growth.
The Bureau of Labor Statistics also revised down the number of jobs added in May and June by 103,000, signalling a slow summer for job creation.
The latest figures have raised questions over what the US central bank, the Federal Reserve, will decide to do with interest rates next month after keeping them on hold for all of this year.
Analysts had expected an increase of 80,000 jobs to be added to the economy last month, rather than a loss of 23,000.
Alongside declines in local government education, there were also falls in retail roles, including wholesale stores, hypermarkets, gas stations and general merchandise shops.
Despite fewer jobs being created, the Bureau of Labor Statistics said the unemployment rate dipped to 4.1% from 4.2%, as the number of people in work or looking for work declined slightly.
Payrolls do have a tendency to be softer in July, but chief investment officer of Premier Miton Neil Birrell said the US jobs market was weaker “by some distance”.
“Labour force participation is back at levels not seen since the days of Covid, meaning jobs just aren’t being created,” he said.
“This does leave the Fed with the problem of a weak jobs market providing a read across to growth, all at a time when inflation is a problem, but this data will ease the pressure to hike rates. It’s a big call in September.”
Kevin Warsh, the newly-appointed chair of the Federal Reserve, has offered little forward guidance on the future path of interest rates, in a policy shift from the US central bank.
Rates were left unchanged, as broadly expected, between 3.5% and 3.75% last month. However, consumer prices remain elevated, with inflation running at an annual rate of 3.5%.
Average hourly earnings rose by 3.2% in the year to July, compared with the 3.5% economists expected, with average hourly earnings for all employees on private non-farm payrolls at $37.62.
