Labor Market Shifts Into Reverse as Employers Balk at Hiring

The labor market posted a modest loss in July, as businesses shed jobs in the face of renewed tariffs and higher costs driven by war in the Middle East.

Employers cut 23,000 positions on a seasonally adjusted basis last month, the Labor Department reported on Friday, and the unemployment rate dropped slightly to 4.1 percent as hundreds of thousands of people left the labor force.

The lower-than-expected reading comes after what had appeared to be a surge in job creation in March and April, born of optimism around tax cuts, a respite from new tariffs, easing interest rates and lower inflation.

Since then, costs have jumped as oil shipments from the Persian Gulf have remained stalled, while the Trump administration has renewed its battle against imports. Job gains for April and May were revised down by 103,000, bringing the monthly average for 2026 to 60,000.

Article source: https://www.nytimes.com/2026/08/07/business/economy/heres-the-latest.html