U.S. Job Growth Slows in June as Labor Force Drop Complicates Fed Rate Outlook
U.S. job growth slowed sharply in June, creating a mixed picture for workers, employers, and the Federal Reserve as policymakers weigh their next interest-rate move.
Employers added 57,000 jobs in June, while the unemployment rate fell to 4.2%, the Bureau of Labor Statistics reported Thursday. On the surface, the lower jobless rate looked like an improvement. But the details showed a weaker labor-market signal. The labor force fell by 720,000 people, and the labor force participation rate dropped to 61.5%.
That matters because the unemployment rate can fall when more people find jobs, but it can also fall when people stop being counted as actively looking for work.
The report also showed that previous job growth was weaker than first reported. April payrolls were revised down by 31,000, and May payrolls were revised down by 43,000, leaving the two months combined 74,000 jobs lower than earlier estimates.
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Hiring remained uneven across industries. Professional and business services added 36,000 jobs, social assistance added 25,000, and health care added 22,000. Leisure and hospitality lost 61,000 jobs, reflecting weaker-than-usual seasonal hiring. Average hourly earnings rose 0.3% in June and were up 3.5% over the year.
The practical consequence is that the Federal Reserve now has a more complicated labor-market signal. Softer hiring can reduce pressure for immediate rate increases, while wage growth and broader inflation concerns may keep policymakers cautious.
Reuters reported that traders lowered the odds of a July rate hike after the jobs report, while still seeing a possible move later in the year.
The next major labor-market checkpoint will be the July jobs report, scheduled for release on Aug. 7.
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