June jobs report misses big, while unemployment falls

MANHATTAN (CN) — Only 57,000 jobs were added to the U.S. economy last month, well short of the 115,000 expected by forecasters, but the unemployment rate dipped slightly to 4.2%.

The report, released early on Thursday by the Bureau of Labor Statistics due to the shortened holiday week, also is significantly lower than the two previous employment reports, which had clocked in at 172,000 jobs added in May and 115,000 added in April.

Revisions slashed into the two previous reports, taking some of the bloom off last month’s employment report. The June report shows 74,000 fewer jobs were actually added in May and April than first reported.

The usual sectors notched gains in jobs, with business services continuing its upward trend at 36,000 positions gained in June and healthcare adding an additional 22,000 positions. Leisure and hospitality saw a big drop, however, losing 61,000 jobs last month.

“On the whole, the report reinforces the view that labor markets have stabilized in recent months but are not yet reaccelerating,” Bradley Saunders, North America economist for Capital Economics, wrote in an investor’s note.

Saunders added “there was little consolation to be taken in the 4.2% unemployment rate since it was largely due to lower participation in the household survey.

After months of declines, June saw virtually no change in the number of government jobs, BLS reported, while manufacturing added only 3,000 jobs.

Early in the week, payroll company ADP reported the private sector added nearly 100,000 jobs in June, marking the 12th consecutive month in which companies have added jobs.

However, the 98,000 headline number is less than the roughly 110,000 jobs most economists had predicted, and the manufacturing and mining sectors have seen a decline in jobs over the last year. Education and healthcare jobs represented nearly half of the headline increase for June.

Job gains were spread fairly evenly among small, mid-sized, and large companies, but ADP noted an overall slowdown in job creation, pointing to weak gains among the typically strong leisure and hospitality sectors.

“The pace of hiring is telling a story of both supply and demand,” Nela Richardson, ADP’s chief economist, said in a statement. “We know it’s taking people longer to find work, but there are also signs of labor supply constraints in certain industries.”

Unemployment has been a bright spot for the labor market, and weekly initial claims sent to the Labor Department have been holding steady at just above 210,000 per week. However, the BLS report noted the number of people unemployed for more than 27 weeks is up 286,000 for the year.

The number of job openings in the May JOLTS report once again increased above expectations, remaining at roughly 7.6 million openings for May after April’s numbers had been revised downward. The job openings rate remains at 4.6%, the highest it has been since late 2024.

“With an end to the war in Iran in sight, the downside risks to the labor market have been reduced, even if we expect higher gas prices to reduce aggregate demand in the near-term,” Matthew Martin, senior U.S. economist at Oxford Economics, wrote in an investor’s note.

However, he noted the labor market still shows some cracks, with the hiring rate barely moving from the 3.2% to 3.4% range despite a larger number of job openings, and layoffs ticking higher.

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