The US labor market showed fresh signs of strain in July, with full-time employment falling for a fourth consecutive month and the share of Americans working or looking for work dropping to its lowest level in decades outside the pandemic era. Full-time employment fell by 106,000 in July to 133.55 million, the lowest reading since December 2024, bringing the total decline since January to 1.11 million.
The labor force participation rate fell to 61.4% in July as roughly 264,000 people left the labor force altogether, according to the Bureau of Labor Statistics' Employment Situation report. Outside of the Covid-era disruption, that participation rate is the lowest since the mid-1970s. The broader employment-to-population ratio slipped as well, falling to 58.9%, its weakest level since May 2014.
A Broader Slowdown, Not an Isolated Miss
The participation and full-time employment declines came alongside a headline payrolls figure that also missed expectations: nonfarm payrolls fell by a seasonally adjusted 23,000 in July, compared with a downwardly revised 20,000 decline in June, while the unemployment rate rose to 4.1%. Economists had broadly expected modest job gains rather than a second straight monthly contraction, and the downward revision to June's already-negative number suggests the slowdown has been building for longer than initially reported.
Why the Details Matter More Than the Headline
Full-time employment's four-month losing streak is arguably a more troubling signal than the headline payrolls miss on its own, since a shift from full-time to part-time work — or out of the labor force entirely — often shows up in these secondary metrics before it's fully reflected in the unemployment rate. With retail spending data also softening this summer, the labor market readings add to a picture of an economy losing momentum on multiple fronts simultaneously rather than facing a single, isolated shock.
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