U.S. jobs growth slows sharply in June, unemployment holds at 4.2%

U.S. employers added 57,000 jobs in June, far short of the roughly 100,000 economists had expected, while the unemployment rate held at 4.2%. The U.S. Bureau of Labor Statistics said the reading showed payroll growth that changed little from May’s pace but came in much softer, a sign the labor market is cooling without yet showing a broad collapse.

The latest report showed a clear split across industries. Employment continued to trend up in professional and business services, social assistance, and health care, but leisure and hospitality lost jobs. In the establishment survey, private payrolls rose by 49,000 and government payrolls added 8,000. Health care and social assistance contributed 46.6 thousand jobs, professional and business services added 36,000, and leisure and hospitality shed 61,000.

The household survey added more evidence that the labor market is losing some momentum. The labor force participation rate fell to 61.5%, the employment-population ratio edged down to 59.0%, and the number of unemployed people stood at 7.1 million. Long-term unemployment also worsened, rising by 286,000 over the year to 1.9 million, or 27.3% of all unemployed people. That suggests more workers are taking longer to find a new job even as the overall unemployment rate remains contained.

Wages continued to rise, but not enough to offset the softer hiring picture. Average hourly earnings for private employees increased to $37.64, while the average workweek stayed unchanged at 34.3 hours. Compared with May, when payrolls rose by 172,000 and unemployment was 4.3%, June marked a much weaker month for job creation. The combination of slower payroll growth, a flat jobless rate, lower participation and steady wage gains points to a labor market that is normalizing after a hotter stretch, though the rise in long-term unemployment and the sharp drop in leisure hiring leave the economy with less cushion if demand weakens further.