U.S. job growth slows sharply in June as labor force shrinks

U.S. employers added just 57,000 jobs in June, far short of the roughly 100,000 to 115,000 increase economists had expected. The unemployment rate edged down to 4.2% from 4.3% in May, but the drop came alongside a smaller labor force, not a burst of hiring.

The Bureau of Labor Statistics said the labor force participation rate fell 0.3 percentage point to 61.5% in June, the lowest since March 2021. That helped pull the unemployment rate lower even as job growth slowed, a sign that the headline rate understated how soft the month was for workers looking for jobs.

Hiring was concentrated in a few industries. Professional and business services added 36,000 jobs, social assistance added 25,000 and health care added 22,000, according to the BLS and CNBC’s breakdown of the report. Leisure and hospitality moved in the opposite direction, losing 61,000 jobs as seasonal hiring came in weaker than usual.

The report also revised down the spring pace of hiring. April payroll growth was cut to 148,000 from 179,000, while May was revised to 129,000 from 172,000. Together, those changes removed 74,000 jobs from the prior estimates and showed that the labor market was already softer than it first appeared.

The BLS said 7.1 million people were unemployed in June. Long-term unemployment rose to 1.9 million, up 286,000 from a year earlier, and 4.7 million people were working part time for economic reasons, a sign that some households are still not getting the hours they want. Those figures point to a labor market that is still expanding, but with less momentum and more strain beneath the surface.

The slowdown followed a stronger early-year trend. Employers added an average of about 114,000 jobs a month from January through May, according to ABC News, so June marked a sharp break from the earlier pace. For households, that means fewer openings and less confidence that job switching will deliver higher pay. For the Federal Reserve, it sharpens the question of whether the labor market is cooling enough to reduce inflation pressure or simply passing through one weak month.