Media365
The US labor market lost momentum in June as employers added far fewer jobs than expected, while the unemployment rate edged lower only because hundreds of thousands of Americans exited the labor force, reinforcing signs of a cooling economy.
According to the US Labor Department, nonfarm payrolls increased by 57,000 jobs in June, well below economists’ expectations of 110,000. The May payroll figure was also revised lower to 129,000 from the previously reported 172,000, while April’s reading was cut to 148,000.
Despite weaker hiring, the unemployment rate declined to 4.2 per cent from 4.3 per cent in May. However, the improvement was largely driven by around 720,000 people leaving the labor force, causing the labor force participation rate to fall to 61.5 per cent, its lowest level since March 2021.
The weaker-than-expected jobs report prompted financial markets to scale back expectations of an immediate interest rate increase by the Federal Reserve. Traders now see less than a 20 per cent chance of a rate hike in July, while the probability of a September hike has eased to around 60 per cent, down from roughly 75 per cent before the data release.
Economists said the slowdown in hiring could reflect delayed economic effects of the recent Middle East conflict, alongside broader uncertainty facing businesses.
Professional and business services led employment gains by adding 36,000 jobs, followed by social assistance (25,000) and healthcare (22,000). In contrast, the leisure and hospitality sector shed 61,000 jobs, offsetting gains in other industries.
Analysts noted that while layoffs remain historically low, employers are becoming increasingly cautious about expanding payrolls amid geopolitical tensions and slowing economic activity.
The latest employment figures align with other recent indicators pointing to softer labor demand, suggesting the US job market is gradually losing steam after remaining resilient for much of the past year.
