US hiring slows again as job growth settles into a stubborn crawl

The US labor market has officially entered a phase best described as economic purgatory: not bad enough to panic, not good enough to celebrate. July’s nonfarm payrolls dropped by 23,000, the first outright decline in months, and the broader trend suggests the slowdown isn’t going anywhere fast.

Year-to-date, the economy has averaged roughly 60,000 new jobs per month. For context, that’s a fraction of the pace seen during the recovery years of 2023 and 2024, when monthly gains routinely ran multiples higher.

The numbers behind the malaise

July’s payroll decline wasn’t just a one-month blip. The Bureau of Labor Statistics revised May’s job gains downward by 66,000 and June’s by 37,000.

The hiring rate has settled at around 3.3%, a level that reflects employers’ deep reluctance to bring on new workers. But the flip side is equally telling: layoffs remain at historic lows, with weekly jobless claims hovering in the narrow band of 203,000 to 207,000.

On August 28, the BLS released a preliminary benchmark revision that trimmed employment figures through March 2026 by 79,000 jobs total. On a seasonally adjusted basis, that works out to roughly 23,000 fewer jobs per month than originally counted. It’s a modest 0.1% reduction in the grand scheme of things, but it reinforces the narrative that the labor market has been softer than headline numbers suggested.

Winners and losers by sector

Not every corner of the economy is struggling to create jobs. Healthcare has been the standout performer, adding between 22,600 and 55,000 positions per month in recent reports.

The story is grimmer in leisure and hospitality, retail, and government. These sectors have all shown weakness in recent months.

The unemployment rate held relatively steady at 4.1% in July. The labor force itself is shrinking, driven by a wave of retirements and tighter immigration policies that have reduced the flow of new workers into the economy.

What to watch next

The next major data point arrives with the August jobs report, which is expected to show an addition of roughly 65,000 new positions.

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