--- title: "Stunning Surprise! US Non-Farm Employment Unexpectedly Drops by 23,000 in July; Previous Two Months Revised Down by 103,000" type: "News" locale: "en" url: "https://longbridge.com/en/news/295241089.md" description: "US Non-Farm Employment decreased by 23,000 in July, significantly deviating from the market expectation of an 80,000 increase and falling below the lower bound of all economists' forecasts, marking the worst performance since the beginning of the year. Non-Farm Employment data for May and June were collectively revised down by 103,000, further deepening signals of a cooling labor market. Traders quickly reduced bets on Federal Reserve rate hikes in 2026" datetime: "2026-08-07T13:17:09.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/295241089.md) - [en](https://longbridge.com/en/news/295241089.md) - [zh-HK](https://longbridge.com/zh-HK/news/295241089.md) --- # Stunning Surprise! US Non-Farm Employment Unexpectedly Drops by 23,000 in July; Previous Two Months Revised Down by 103,000 The US job market suffered a heavy blow in July as Non-Farm Employment unexpectedly contracted sharply, completely overturning market expectations and prompting investors to reassess the Federal Reserve's monetary policy path. According to data released by the US Bureau of Labor Statistics (BLS) on Friday, **US Non-Farm Employment decreased by 23,000 in July, significantly deviating from the market expectation of an 80,000 increase and falling below the lower bound of all economists' forecasts, marking the worst performance since the beginning of the year.** Meanwhile, **Non-Farm Employment data for May and June were collectively revised down by 103,000, further deepening signals of a cooling labor market.** Following the data release, **traders quickly reduced bets on Federal Reserve rate hikes in 2026**. US stock index futures rose promptly, while US Treasury yields declined simultaneously. The only bright spot was the unexpected decline in the unemployment rate. The unemployment rate fell from the previous 4.2% to 4.1% in July, below expectations, which to some extent reflects concerns about the continued decline in the labor force participation rate. ## Non-Farm Data Hits Year-to-Date Low; Previous Data Significantly Revised Down Non-Farm Employment decreased by 23,000 in July, the worst monthly figure since a decrease of 156,000 in February this year. According to Bloomberg, the deviation amounted to approximately five standard deviations, far exceeding the usual range of forecast errors. Revisions to previous data also drew attention. The BLS revised May Non-Farm Employment down from +129,000 to +63,000, a downward adjustment of 66,000; June data was revised down from +57,000 to +20,000, a downward adjustment of 37,000. The combined downward revision of 103,000 for the two months further weakened the credibility of the previously reported labor market performance. From an industry structure perspective, according to Bloomberg, job reductions in July were mainly concentrated in the government sector, leisure and hospitality, and retail trade. Private sector employment increased by 30,000, recording slight growth for the second consecutive month, primarily driven by the healthcare and social assistance industries. ## Wage Growth Slows Significantly; Inflation Pressure May Ease Wage data softened simultaneously. Average hourly earnings in July increased by only 0.1% month-over-month, missing the market expectation of 0.3% and falling short of June's 0.3% gain; the year-over-year growth rate was 3.2%, also significantly below the median market expectation of 3.5%. The significant slowdown in wage growth implies that inflationary transmission pressure from the labor market has eased, providing a basis for the Federal Reserve to retain greater flexibility in its policy decisions. ## Labor Force Participation Rate Remains Under Pressure Notably, the decline in the unemployment rate was partly due to the continued drop in the labor force participation rate. The labor force participation rate fell further to 61.4%, the lowest level in more than five years. This means that more people have exited the labor force, statistically lowering the unemployment rate rather than purely reflecting an improvement in employment. ## Federal Reserve Policy Path Faces Reassessment According to Bloomberg, this employment report suggests that the labor market may have begun to come under pressure amid the dual impact of uncertainties stemming from the war in Iran and rising price pressures, although resilient consumer demand had previously supported hiring intentions among some employers. The market currently expects that **the Federal Reserve may delay its planned rate hike in September.** Federal Reserve officials need to carefully balance inflation risks against a weakening job market, and this data undoubtedly adds complexity to policy decision-making. ## Related News & Research - [Why slow job growth doesn’t mean the labor market is in trouble](https://longbridge.com/en/news/295287163.md) - [Unemployment rate is falling, but for 'the wrong reason,' experts say](https://longbridge.com/en/news/295297301.md) - [Total Nonfarm Payrolls for July 2026 Are Projected to Rise By 97,500](https://longbridge.com/en/news/295119950.md) - [Unemployment improved because thousands of workers disappeared. Where did they go?](https://longbridge.com/en/news/295298527.md) - [Hiring shortfall leaves all options open for Fed](https://longbridge.com/en/news/295238740.md)