Unemployment Dips to 4.2 Percent as Hiring Slows Sharply in June

U.S. employers added just 57,000 jobs, far below expectations, while a shrinking labor force helped push the jobless rate lower.

by Emmitt Barry, Worthy News Washington D.C. Bureau Chief

(Worthy News) – The U.S. unemployment rate unexpectedly dipped to 4.2 percent in June, even as hiring slowed sharply and employers added far fewer jobs than economists had forecast, according to new Labor Department data released Thursday.

Employers added just 57,000 jobs last month, a steep slowdown from May’s revised gain of 129,000 and far below consensus expectations of roughly 110,000 to 114,000. The softer-than-expected report suggests the labor market is cooling, despite a headline unemployment rate that moved slightly lower.

The decline in unemployment was driven less by robust hiring than by a drop in labor-force participation. The share of Americans working or actively looking for work fell by 0.3 percentage points to 61.5 percent, helping keep the jobless rate subdued even as payroll growth weakened.

The report also revised earlier job gains lower. April’s payroll increase was cut from 179,000 to 148,000, while May’s was revised down from 172,000 to 129,000. Together, the revisions mean the economy added 74,000 fewer jobs than previously reported.

Private-sector hiring accounted for most of June’s gains, adding 49,000 jobs, while government employment rose by only 8,000. Professional and business services led the month with 36,000 new jobs, followed by social assistance with 25,000 and health care with 22,000.

However, leisure and hospitality shed 61,000 jobs, a notable reversal after recent strength in the sector. The Bureau of Labor Statistics said the decline reflected weaker-than-usual seasonal hiring.

Wage growth remained steady but not especially strong. Average hourly earnings rose 0.3 percent for the month and 3.5 percent from a year earlier, while average weekly hours held flat at 34.3. Full-time employment fell by 514,000, while part-time employment was little changed.

The number of Americans holding multiple jobs also rose by more than 120,000 to 8.554 million, a sign that some workers may still be seeking additional income as household budgets remain pressured by elevated prices.

The jobs report was released one day earlier than usual because of the Fourth of July holiday weekend and came alongside weekly unemployment claims data. Initial jobless claims fell by 1,000 to 215,000 for the week ending June 27, while continuing claims remained flat at 1.814 million.

Markets initially welcomed the weaker hiring numbers, viewing them as a possible reason for the Federal Reserve to pause rather than move quickly toward higher interest rates. Stock futures rose after the report, while the two-year Treasury yield, which is closely tied to expectations for Fed policy, moved lower.

Still, the report presents a mixed picture for policymakers. Inflation remains a major concern, but slowing job growth may bring the Fed’s employment mandate back into sharper focus ahead of its July 28–29 policy meeting.

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