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Hiring in the U.S. slowed significantly last month, with information and financial sectors registering job losses.
The information services sector was a notable weak spot for July, posting a job loss of 20,000. Professional and business services and financial activities experienced payroll declines of 1,000 and 4,000, respectively.
“These sectors are known for creating higher-wage, higher-quality jobs,” said Julia Pollak, chief economist at ZipRecruiter. “The labor market is clearly no longer normalizing. Further deterioration could set off a negative cycle of job losses, consumer spending declines, business revenue declines and more job cuts.”
Nonfarm payrolls grew by just 114,000 for the month, well below the Dow Jones estimate for 185,000. The unemployment rate climbed to 4.3%, its highest since October 2021.
To be sure, there were some relative bright spots.
Health care again led in job creation, adding 55,000 to payrolls. Other notable gainers included construction (25,000), government (17,000), and transportation and warehousing (14,000). Leisure and hospitality, another leading gainer over the past few years, added 23,000.
“The latest snapshot of the labor market is consistent with a slowdown, not necessarily a recession. However, early warning signs suggest further weakness,” said Jeffrey Roach, chief economist at LPL Financial.