...
By Matthew Robinson and Daniel Orton
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
Job growth in the United States slowed sharply in June, with employers adding around half the number of jobs that economists had forecast.
According to the figures from the Bureau of Labor Statistics (BLS) on Thursday, U.S. employers added 57,000 jobs in June, less than half the number added in May. Nonfarm jobs were expected to rise by 115,000 in June, according to Dow Jones forecasts.
The unemployment rate edged down to 4.2 percent from 4.3 percent in May, though economists noted that the decline was driven largely by fewer people participating in the labor force rather than a surge in hiring.
Read More on News
The latest report adds to signs that the labor market is losing momentum after several years of resilience, with revisions also showing that job creation in April and May was weaker than previously estimated.
The weaker-than-expected report could also prove politically awkward for President Donald Trump, who has frequently pointed to the economy and labor market as evidence that his policies are working. While unemployment remains historically low and employers are still adding jobs, the sharp slowdown in hiring and downward revisions to prior months' figures are likely to fuel criticism from Democrats that the administration has yet to deliver the stronger job growth that voters were promised.
Hiring Slowdown Appears Broader Than Expected
The BLS revised down payroll growth in the previous two months by a combined 74,000 jobs. May's gain was reduced from 172,000 to 129,000, while April's total was revised from 179,000 to 148,000.
Daniel Zhao, chief economist at Glassdoor, said the revisions suggest recent labor market strength may have been overstated.
"June's jobs report put a damper on the fireworks, coming in well below expectations and pointing to a labor market that's more fizzle than sparkle," Zhao said in a statement shared with Newsweek. "Payroll growth slowed sharply to 57,000, and downward revisions to April and May, a combined 74,000 fewer jobs than previously reported, suggest the hiring slowdown runs deeper than the headline numbers first let on."
Annual wage growth remained relatively firm. Average hourly earnings rose 3.5 percent year-over-year in June, up slightly from 3.4 percent in May.
Still, Zhao said the report points to a labor market that has yet to regain momentum.
"The unemployment rate's decline to 4.2 percent is a case of good news for the wrong reasons: it was driven by people leaving the labor force, not by more hiring," he said. "This points to a labor market that's stubbornly refusing to reaccelerate, despite recent optimism."
Related Story
List of Companies Laying off Employees in July
Fewer Americans Looking for Work
While the unemployment rate ticked lower, labor force participation fell to 61.5 percent from 61.8 percent in May, indicating that fewer Americans were working or actively searching for jobs.
Jeffrey Roach, chief economist at LPL Financial, said the report showed a growing number of people stepping away from the labor market altogether. According to LPL Financial's analysis, the number of people not participating in the labor force increased to about 105.8 million.
Roach argued that the drop in unemployment should be viewed alongside falling participation rates.
"In a strong economy, a low unemployment rate can coexist with healthy participation rates but that's not the case now," he said.
...
Leisure and Hospitality Loses Jobs Despite World Cup Boost Expectations
The sector suffering the largest decline in June was leisure and hospitality, which shed 61,000 jobs. Restaurants, bars and hotels accounted for much of the drop.
The losses came despite expectations that the FIFA World Cup, which is being hosted across multiple U.S. cities, would provide a temporary hiring boost for hospitality businesses.
Glassdoor noted that while some narrow categories, including temporary staffing and local government support positions, appeared to benefit from event-related hiring, the gains were too small to offset broader losses in the sector.
Retail employment also declined, with employers cutting about 7,500 jobs.
By contrast, health care continued to be a major source of job creation, adding nearly 47,000 positions, while professional and business services added 36,000 jobs.
What the Numbers Say About the Economy
The June report paints a picture of an economy that is still growing but generating jobs at a significantly slower pace than earlier in the year.
Economic growth has remained positive despite persistent pressures from elevated inflation and weak consumer sentiment. However, economists are increasingly watching for signs that employers are becoming more cautious about expanding payrolls.
Roach pointed to another warning sign in the report: a decline in hours worked.
"Hours worked declined, indicating an upcoming slowdown in broader economic activity," he said.
He added that employers appear to be reducing labor utilization even as overall payrolls continue to grow.
"Firms are still adding to their payrolls, but hours worked are below pre-pandemic levels as firms cut back labor utilization," Roach said. "A concerning trend is the increasing flow of individuals dropping out of the job market altogether."
What It Means for the Federal Reserve
The mixed employment picture is likely to draw close attention from Federal Reserve policymakers as they weigh the outlook for inflation and economic growth.
While hiring has slowed considerably, job gains remain positive and wage growth has held up, suggesting the labor market has not deteriorated dramatically.
"For now, the labor market is holding, giving the Fed opportunity to stay focused on price stability," Roach said.
The June jobs report is unlikely to settle the debate over the direction of the economy, but it does reinforce concerns that the labor market's post-pandemic strength is fading as more workers leave the labor force and hiring momentum weakens.
View 0 Comments
Submit Correction
View Editorial & AI Guidelines