Accountancy Slice

North America

The U.S. labor market unexpectedly contracted in July, shedding 23,000 jobs compared with economists’ expectations for an 83,000 gain, while revisions showed that May and June added 103,000 fewer jobs than previously reported. Despite the decline in employment, the unemployment rate edged down to 4.1% from 4.2% as more Americans left the labor force altogether. The figures have raised fresh concerns about the strength of the economy after a period of relatively stable hiring. Although lower immigration has reduced the number of new jobs needed to keep employment steady, both hiring and layoffs remain subdued, and nearly three in 10 unemployed Americans have now been looking for work for more than six months. The weaker jobs data could also complicate the Federal Reserve’s consideration of a September interest-rate increase. Some officials have recently emphasized elevated inflation and supported tighter monetary policy, but the July contraction and downward revisions have made the labor market appear more fragile. Traders slightly reduced their expectations for a September rate increase following the report, with another jobs report and additional inflation data due before the Fed’s next meeting.