Nonfarm payroll employment decreased by 23,000 jobs in July, while the unemployment rate inched down to 4.1%, according to the U.S. Bureau of Labor Statistics, the first net decline of jobs since February.
Employment numbers for June and May were also revised downward by a total of 103,000 jobs, indicating a wider slowdown than previously reported. And while the unemployment rate fell, it did so due to a drop in the labor participation rate — driven by a perception that there are not many opportunities available right now, economists said.
“A large drop in teen unemployment, and the populations of reentrants and new entrants signals that this change is due to people on the margins stepping aside until opportunities become more plentiful,” ZipRecruiter Labor Economist Nicole Bachaud said in a statement.
The prime-age labor force participation rate rose after a stark decline in June, however, an “encouraging” sign, Andrew Flowers, chief economist at Appcast, said in a statement.
But headwinds, including inflation and high energy costs, may continue to compress the labor market, Cory Stahle, senior economist for the Indeed Hiring Lab, said in a statement.
“Don’t put too much stock in a single report, but don’t ignore the fact that the plane is starting to shake as the labor market looks to be entering a rough patch,” Stahle said.
Employee confidence is also down, a recent Glassdoor report showed, partly due to weak entry level prospects and pressure to implement artificial intelligence tools at work.