The July employment report showed nonfarm payrolls fell by 23,000, compared with the 80,000 jobs increase expected in a survey compiled by Bloomberg as of 7:35 am ET, while June payrolls were revised downwards to a 20,000 increase and May payrolls were revised down to a 63,000 increase, for a net downward revision of 103,000 jobs.
Private payrolls rose by 30,000 in July, the same as in June and well below the increase of 82,000 private jobs expected. Health care and social assistance sector jobs increased by 22,600 but government sector jobs decreased by 53,000, leisure and hospitality jobs fell by 40,000 and retail payrolls declined by 19,400.
The preliminary benchmark revision for nonfarm payrolls is due to be released on Aug. 28.
The unemployment rate fell to 4.1% in July from 4.2% in June, compared with a 4.2% rate expected, while the labor force participation rate declined to 61.4% from 61.5% in June and the size of the labor force contracted. Household employment fell but household employment fell at a faster rate.
Hourly earnings rose by only 0.1%, slower than the 0.3% gain expected, and following a 0.3% increase in June. Hourly earnings were up 3.2% year-over-year.
The average workweek remained at 34.3 hours in July, as expected.
The monthly employment report released by the Bureau of Labor Statistics consists of two separate surveys and is considered the most important data release for the month. The survey of businesses measures the levels of employment and wages and the length of the average workweek, broken down by industry.
The survey of households measures the number of people working or looking for work, the unemployment rate, those that have left the workforce and reasons for part-time work.
Market reaction can be mixed, particularly when the two surveys disagree. A strong increase in employment or a decline in the unemployment rate is generally a positive for stocks as sign of a strong US economy, but bonds would react negatively to the same news, particularly if wages rise sharply at the same time.