08/07/2026
📊 The unemployment rate fell in July, but the U.S. also lost jobs. How can both be true?
The latest U.S. jobs report offers an important reminder that the unemployment rate doesn’t always tell the full story about the labor market.
According to the U.S. Bureau of Labor Statistics:
• The U.S. lost 23,000 jobs in July
• The unemployment rate fell to 4.1%
• Labor force participation fell to 61.4%
• May and June job gains were revised downward by a combined 103,000 jobs
• Over the last three months, the economy added an average of only about 20,000 jobs per month
So how does unemployment go down while jobs are being lost?
The unemployment rate only includes people who are actively participating in the labor force. When someone without a job stops actively looking for work, they are generally no longer counted as “unemployed” in the headline unemployment rate.
In July, approximately 264,000 people left the labor force. There are also currently 5.9 million people outside the labor force who say they want a job, including 476,000 discouraged workers who believe no jobs are available for them.
That means a declining unemployment rate does not necessarily mean more people are finding employment.
The industry numbers also show an uneven labor market. Retail lost 19,000 jobs, financial activities lost 14,000, and local government education lost 50,000, while healthcare continued to grow with approximately 22,000 jobs added.
For job seekers, employers, workforce professionals, and the disability employment community, understanding what is happening beneath the headline numbers matters.
At Employment Support Services, we continue to work with job seekers and employers to create connections, develop skills, explore employment opportunities, and build pathways into competitive integrated employment.
Source: U.S. Bureau of Labor Statistics, July 2026 Employment Situation Report
