Key facts
- U.S. employers added 57,000 jobs in June.
- The unemployment rate ticked down to 4.2%.
- Labor force participation rate fell to 61.5%.
- Average hourly earnings increased by 3.5% compared to the previous year.
- Inflation stood at 4.2% in May year-over-year.
The U.S. job market showed slower but steady gains in June, with employers adding 57,000 jobs and the unemployment rate ticking down to 4.2%. While the headline numbers appear stable, details indicate a cooling labor supply, as the labor force participation rate fell to 61.5% and the employment-population ratio slipped to 59.0%. This suggests fewer people were actively seeking work, helping to keep unemployment stable despite slower hiring.
Revisions to previous months' data also indicated a moderating trend, with May payroll growth revised down to 129,000 and April's to 148,000. Despite these adjustments, the labor market is still expanding, albeit at a more moderate pace. The Federal Reserve Bank of Dallas noted that the "break-even" employment growth needed to keep unemployment stable has decreased significantly, making June's 57,000 job gain constructive.
Wage growth continues to support household income, with average hourly earnings rising 3.5% year-over-year in June. However, inflation, which stood at 4.2% in May, is absorbing some of these gains, limiting the real benefit to households. Rob Haworth, Senior Investment Strategy Director at U.S. Bank Asset Management Group, advised investors to monitor the mix of hiring, wages, and labor supply for a clearer picture of the economy and markets.