Week of August 3–7, 2026

In summary

• July Nonfarm Payrolls unexpectedly declined -23,000, far below forecasts of +80,000, with the government sector shedding -53,000 and the private sector adding +20,000; prior months were revised down by roughly -130,000 and the Unemployment Rate fell to 4.1% as people left the labor force.
• Those not in the labor force hit a record 106.2 million, up +2.7% Y/Y and higher by 3.2 million over the last nine months, as the labor force itself has shrunk by roughly 2.4 million over the last eight months to 169.1 million.
• Average Hourly Earnings rose just +0.05% M/M against forecasts of +0.3%, decelerating to +3.15% Y/Y and the slowest pace since May 2021, while the Participation Rate slipped to 61.4% with the 55+ cohort at a multi-decade low of 36.9%.
• Q2 Productivity came in at +1.4% Q/Q, solidly above forecasts of +0.6%, as Output accelerated to +1.7% Q/Q against just +0.3% growth in hours worked; Unit Labor Costs rebounded to +1.4% Q/Q but landed below forecasts of +2.1%.
• July Challenger Job Cut Announcements slowed to 33,429, the lowest month of 2026, though hires remain anemic at 16,095; year-to-date cuts of 477,033 are tracking just +1.9% above the historical average while hires of 107,500 sit -68% below it, and AI has been the most-cited reason for cuts five months running at 112,713 year-to-date.
• Both ADP and JOLTS read less negative than the payrolls figure: ADP Payrolls rose +44,000 against forecasts of +70,000 with small firms adding +23,000, while June job openings ticked down to 7.36 million versus forecasts of 7.40 million and quits rose to 3.23 million, the highest since June 2025.
• The June Trade Deficit narrowed to -$73.3 billion, roughly in line with expectations, as imports fell -1.84% M/M and exports declined -0.91%; separately, both Service PMIs improved in July, with the S&P figure revised up to 54.6 and the ISM at 54.1, though the ISM employment component moved back into contraction at 47.4.