U.S. employers added just 57,000 jobs in June, a much weaker showing than analysts expected and a sign that the pace of hiring may be cooling.
By the numbers
Economists surveyed by FactSet had projected a gain of 100,000 jobs for the month.
The unemployment rate edged down to 4.2% in June from 4.3% in May.
The June payroll figures represented a clear slowdown following stronger reports from March through May, when job gains each exceeded 100,000. The Labor Department also revised April and May employment growth lower by a combined 74,000 jobs on Thursday, showing that hiring in those months was not as strong as initially reported.
Even with those revisions, job creation over the past three months has outpaced the start of the year. Employers added an average of about 111,000 jobs per month from April through June, compared with roughly 73,000 per month between January and March.
Among industries, professional and business services posted the strongest growth in June, adding 36,000 positions. Healthcare continued to expand as well, though more slowly than it has recently, with 22,000 jobs added in June versus an average monthly increase of 38,000 over the previous 12 months, according to the Labor Department.
Leisure and hospitality lost 61,000 jobs, a decline that surprised some economists who had anticipated firmer hiring tied to the World Cup and July 4 holiday celebrations.
Capital Economics pointed to a 55,000-job drop in accommodation and food services employment — a segment within leisure and hospitality — as the key factor behind the disappointing report, noting that the reversal from May weighed heavily on June’s overall job gains.
However, some experts expressed doubts about the numbers.
“There is zero chance leisure and hospitality posts a negative print in the midst of the World Cup,” Jamie Cox, Managing Partner for Harris Financial Group, said in an email. “Revisions higher in the next few months are coming.”
What experts are saying
Despite the weaker-than-expected hiring, analysts noted that labor market conditions overall have improved from earlier in the year, with employment growth continuing at a healthy pace.
Jerry Tempelman, vice president of economic and fixed income research at Mutual of America Capital Management, pointed to the labor market’s resilience.
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“Geopolitical and inflationary headwinds have had only a minimal effect on slowing or preventing hiring to this point, and payroll growth has already surpassed last year’s pace,” he said in an email.
Still, economists said the report could hint at underlying issues in the labor market. The hiring rate has remained depressed in recent months, weighing on consumers’ confidence about finding a new job.
What does this mean for Fed rate cuts?
Thursday’s weaker-than-expected jobs report may give the Federal Reserve some breathing room in dealing with inflation, which has jumped to its highest levels in more than three years. Because of the inflation flare-up, the Federal Reserve last month signaled it is open to interest rate hikes later this year.
But with signs of a weaker labor market, the Fed may be able to hold off on hiking rates, economists said on Thursday. Under the Fed’s dual mandate, the central bank must ensure that inflation and unemployment remain low.
“The market has priced additional tightening from the Fed this year, but that looks increasingly unwarranted by the data,” Stephen Coltman, head of macro at 21shares, a investing platform for cryptocurrency exchange-traded products, said in an email.
Aimee Picchi
