The US labor force participation rate dropped to 61.4% in July, down from 61.5% in June, hitting a level not seen since early 2021. That might sound like a rounding error, but the number underneath it tells a grimmer story: roughly 264,000 people walked away from the labor force entirely.
Pair that with nonfarm payrolls that actually contracted by 23,000 jobs, against expectations of an 80,000 gain, and you get a jobs report that managed to disappoint on almost every line item.
The numbers behind the headline
The Bureau of Labor Statistics didn’t just deliver bad news for July. It retroactively made May and June worse, too. Revisions to prior months shaved off a combined 103,000 jobs from previously reported figures.
The unemployment rate technically improved, ticking down to 4.1% from 4.2% in June. About 6.9 million Americans remained unemployed. But economists have been quick to point out that the rate fell for the wrong reasons. When people stop searching for work, they’re no longer counted as unemployed.
