The Labor Department reported weaker-than-expected job growth in June, while a shrinking labor force helped push the unemployment rate lower.
By yourNEWS Media Newsroom
The U.S. unemployment rate fell unexpectedly to 4.2% in June even as employers added just 57,000 jobs, according to Labor Department data released Thursday.
Economists surveyed by Econoday had expected the economy to add 114,000 jobs and projected that the unemployment rate would remain unchanged.
The June report also revised prior job gains lower. May payroll growth was cut to 129,000 from the previously reported 172,000. April was revised down to 148,000 from 178,000. Together, the revisions show that payrolls were 74,000 lower than earlier estimates indicated.
Private-sector employers added 49,000 jobs in June, far below the consensus forecast of 123,000.
The weaker headline gain comes as the labor market adjusts to a major shift away from dependence on immigration-driven workforce growth. Some economists say job totals that appear low compared with recent years may now represent solid growth because the labor force is expanding more slowly.
Economists have lowered estimates of the so-called break-even rate of job growth, the number of jobs needed each month to prevent unemployment from rising. Some now estimate that figure may be close to zero. During the period of higher immigration from 2021 through 2024, the economy needed more than 100,000 new jobs per month to keep up with labor-force growth.
Retirements are also limiting labor force growth as more baby boomers leave work and smaller younger generations do not fully replace them.
Hiring in June varied sharply by sector.
Professional and business services added 36,000 jobs. Health care and social assistance added 46,600.
Leisure and hospitality employment fell by 61,000 on a seasonally adjusted basis, suggesting the Labor Department’s seasonal adjustment model expected stronger summer hiring than occurred. Before seasonal adjustments, the sector added 373,000 jobs.
Manufacturing employment rose by 3,000. Durable goods manufacturers added 6,000 jobs, while nondurable goods employment declined by 3,000. Construction added 11,000 jobs.
Government employment increased by 8,000. Federal government payrolls, which have been contracting under the Trump administration’s government efficiency policies, rose by 2,000. State and local government employment increased by 6,000.
Wages continued to rise. Average hourly earnings for all employees increased by 13 cents, or 0.3%, to $37.64. Over the past year, hourly earnings are up 3.5%.
The average workweek was unchanged at 34.3 hours. In manufacturing, the average workweek edged down to 40.3 hours, while overtime ticked up to 3.2 hours.
The decline in the unemployment rate was driven partly by a sharp drop in the labor force. The seasonally adjusted labor force fell by 720,000, from 170.078 million in May to 169.358 million in June.
Over the past year, the non-seasonally adjusted foreign-born labor force has declined by 700,000, reflecting the Trump administration’s crackdown on illegal immigration. The number of foreign-born men in the labor force fell by 970,000, while the number of foreign-born women rose by 271,000.
The native-born labor force declined by 445,000 over the same period, reflecting demographic pressures from an aging population. As with the foreign-born labor force, the number of men declined while the number of women increased.
Foreign-born employment fell by 506,000 to 30.7 million. Native-born employment declined by 655,000 to 132 million.
The foreign-born civilian population dropped by 571,000, from 49.135 million to 48.564 million. The native-born population increased by 2.152 million, from 224.450 million to 226.602 million.
The June report shows a labor market that is still adding jobs but at a slower pace, with falling labor force participation helping lower the unemployment rate even as payroll gains came in well below expectations.
Original article
Comments