The U.S. economy shed 23,000 jobs in July, indicating the labor market has not stabilized. This fell far short of the 83,000 roles economists expected. Adding to the concern, the Bureau of Labor Statistics revised down the prior two months by a combined 103,000 jobs.

Wage growth slowed to 3.2% from one year ago, remaining below the 3.5% inflation rate. Heather Long, chief economist at Navy Federal Credit Union, described the report as "bleak," noting that the labor force participation rate hit its lowest point since February 2021.

Employment contracted significantly in local government education, retail, and leisure and hospitality. However, health care, manufacturing, and construction saw modest gains.

Stock futures rose and bond yields dropped following the news. The data likely eases pressure on the Federal Reserve to hike interest rates in September, with the odds of a rate hike falling from over 50% to about 40%.