U.S. hiring slowed to 57,000 jobs in June as workforce shrank
The Labor Department said job growth cooled sharply in June, while earlier gains for April and May were revised lower.
By Hana Yoshida · Markets Reporter
3 min read
U.S. employers added 57,000 jobs in June, a sharp slowdown that points to a more cautious hiring market at a sensitive moment for the economy. The Labor Department said Thursday that the unemployment rate fell to 4.2%, but the drop came largely because many people stopped looking for work and were no longer counted as unemployed.
The June gain was less than half the prior month’s revised total. The Labor Department also cut its earlier estimates for spring hiring, lowering May’s gain to 129,000 from 172,000 and April’s to 148,000 from an initial estimate of 179,000.
The report suggests employers remain reluctant to add staff while inflation stays elevated and consumers show signs of strain. The Associated Press has reported that inflation is at a three-year high and consumer confidence is near post-pandemic lows.
Service sectors drag on job growth
Restaurants, bars and hotels cut 61,000 jobs in June, according to the Labor Department figures. That was a setback for expectations that the World Cup, being held in several U.S. cities, would provide at least a temporary boost to hiring.
Retailers also reduced payrolls, shedding 7,500 jobs. Those losses weighed on the overall number even as some other industries kept adding workers.
Professional and business services added 36,000 jobs, the report showed. That category includes fields such as architecture, engineering and software development, areas often discussed as vulnerable to artificial intelligence.
Health care remained a steady source of employment growth, adding nearly 47,000 positions. The sector has been one of the economy’s most consistent job creators.
Fed faces mixed signals
The broader economy has continued to expand, though not at a rapid pace. Government data cited in the report showed gross domestic product grew at a 2.1% annual rate in the first quarter, while some forecasts expect slower growth for the April-through-June period.
Even modest hiring can support consumer spending, especially among higher-income households. At the same time, continued job gains complicate the Federal Reserve’s effort to bring inflation down.
The Fed’s key interest rate is about 3.6%, according to the report. Fed Chair Kevin Warsh said Wednesday in Portugal that he would work to return inflation to the central bank’s 2% target, but he did not say whether policymakers would raise rates at their July meeting.
A gain of 57,000 jobs would usually be viewed as weak. Some economists, however, see the threshold differently now because retirements are rising and new immigration has fallen sharply, leaving the labor force with little growth.
Nicole Bachaud, a labor economist at ZipRecruiter, said mismatches between employers and job seekers may also be holding back hiring. She said companies on the platform are increasingly seeking more senior workers, while many applicants are looking for entry-level roles.
Bachaud said fewer workers are quitting than in the period just after the pandemic, making it harder for employers to recruit experienced staff from other companies. That leaves less-experienced workers with fewer openings and helps explain why many job seekers remain frustrated even while the unemployment rate is low.
This story draws on original reporting from Fortune.