US employers cut 23,000 jobs in July as mortgage rates climb further

U.S. employers unexpectedly cut 23,000 jobs in July, the Labor Department reported Friday, a sharp reversal after forecasters had expected job growth to approach 100,000. The department also revised down May and June payrolls by a combined 103,000 jobs. Local public schools cut 50,000 jobs, restaurants and bars lost 26,000, and retailers shed 19,000.

The unemployment rate fell to 4.1%, the lowest since June 2025, but the drop came as 264,000 people left the labor market rather than from stronger hiring. The share of Americans working or looking for work fell to 61.4%, the lowest level since February 2021. Job openings also slipped to 7.36 million in June from 7.54 million in May, though layoffs held steady at 1.8 million and quits rose slightly.

The average 30-year fixed mortgage rate rose for a fifth straight week to 6.69%, Freddie Mac said Thursday, its highest level in just over a year and up from 6.63% a year ago. Higher rates can add hundreds of dollars a month to a borrower's payment and have contributed to sluggish home sales this year. The 15-year fixed rate, often used for refinancing, eased slightly to 6.01%.

New unemployment benefit claims rose by 1,000 to 199,000 for the week ending August 1, still within the historically healthy range of recent years. Stocks rose on Wall Street Friday following the weak jobs report, with the S&P 500 hovering near the record it set earlier in the week, while Treasury yields fell.

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