The US unemployment rate eased to 4.1% in July 2026 from 4.2% in June, coming in below expectations as more people left the workforce. The number of unemployed people dropped by 178,000 to 6.916 million, but total employment also declined by 87,000 to 162.177 million. The labor force shrank by 264,000 to 169.094 million, pulling the participation rate down to 61.4%, its lowest level since early 2021. The employment rate also slipped to 58.9%, an over four-year low. Broader labor market slack looked steady, with the U-6 unemployment rate (including underemployed and discouraged workers) unchanged at 7.9%.