US jobs report supports Federal Reserve’s inflation focus

The US labor market is doing the Fed a quiet favor. July’s employment numbers came in well below expectations, but the unemployment rate still ticked lower, giving Federal Reserve officials exactly the kind of mixed-but-stable backdrop they need to keep fighting inflation without panicking about a jobs collapse. Nonfarm payrolls fell by 23,000 in July, a stark miss against the consensus forecast of an 80,000 gain. Private sector employers added 30,000 jobs, but that modest figure was more than wiped out by a loss of 53,000 government positions. The numbers behind the headline The unemployment rate edged down to 4.1% in July from 4.2% in June. Average hourly earnings also increased slightly, meaning workers who kept their jobs are still seeing some wage growth. The July report, released by the Bureau of Labor Statistics on August 7, was not the only piece of sobering news. A preliminary benchmark revision published August 28 trimmed nonfarm employment estimates by 79,000 jobs, or roughly 0.1%, over the twelve months ending March 2026. On top of that, earlier revisions to May and June payroll figures shaved a combined 103,000 jobs from prior estimates. The Federal Reserve held its po...