WASHINGTON—Healthcare employment rose by 22,000 in July, making the sector the clearest source of job growth as the U.S. labor market unexpectedly contracted overall, according to data from the Bureau of Labor Statistics released Friday.
Total nonfarm payroll employment fell by 23,000 last month, the first decline in five months and far below economists' expectations for an 80,000 increase, the BLS said. Healthcare employment continued to trend higher, although its July gain was below its average monthly increase of 36,000 over the previous year.
The healthcare gains stood out against declines in several other major industries. Local government education employment fell by about 50,000, while retail trade shed about 19,000 jobs. Leisure and hospitality employment dropped by 40,000, including a decline of 26,100 jobs at restaurants and bars, according to the BLS.
Construction added 22,000 jobs in July and manufacturing employment increased by 5,000, providing additional support to the private economy. Excluding government employment, private payrolls rose by 30,000, matching the gain recorded in June, Reuters reported based on the BLS data.
The broader figures pointed to a labor market losing momentum. Payroll gains for May and June were revised down by a combined 103,000 jobs, with May's increase reduced to 63,000 from 129,000 and June's to 20,000 from 57,000. The BLS said the revisions reflected additional employer and government reports as well as recalculated seasonal factors.
The unemployment rate nevertheless edged down to 4.1% from 4.2% in June. The labor-force participation rate fell to 61.4%, its lowest level since February 2021, as the number of people in the labor force declined.
Wage growth also moderated. Average hourly earnings rose 3.2% from a year earlier, compared with a 3.4% increase in June, while the average private-sector workweek was unchanged at 34.3 hours.
The weak employment report reduced market expectations for a Federal Reserve interest-rate increase in September, though policymakers' next steps will also depend on incoming inflation data. The Fed last week maintained its benchmark overnight interest-rate target at 3.50%-3.75%.
The BLS is scheduled to release the August employment report on Sept. 4. It will also publish a preliminary benchmark revision to establishment-survey data on Aug. 28.
