The U.S. economy lost 23,000 jobs in July, far below the expected 83,000 gain, while unemployment slightly dropped to 4.1%. Previous months were revised down by 103,000 jobs. Wage growth slowed to 3.2% annually, below 3.5% inflation. The labor force participation rate hit its lowest since February 2021 as over two million people left the workforce since November. Government education, retail, and leisure sectors saw the largest job losses. Healthcare and construction showed modest gains. The weak report reduced expectations for Federal Reserve rate hikes, boosting stocks and lowering bond yields.