Employers added 147,000 jobs in June as labor market remains resilient
Employers created 147,000 jobs in June, close to the healthy pace of job creation in May, despite economic uncertainty that has weighed on the economy.
The unemployment rate ticked down to 4.1 percent, according to a jobs report released Thursday by the Labor Department, reflecting the exit of workers from the labor market. The June unemployment rate hovers near a historically low level.
The report beat forecasters’ expectations of 110,000 jobs added.
Businesses have been adding jobs at a slower pace this year compared to last year. But so far, heightened trade barriers, elevated interest rates and federal government cuts that have spooked Wall Street and Main Street alike have yet to deliver a hit to the labor market. Aside from a few key sectors, hiring nevertheless has fallen to a standstill in many industries.
Average hourly wages rose 0.2 percent in June and are up 3.7 percent this year, beating inflation, in a boost to Americans’ pocketbooks.
Layoffs remain low. Job openings increased in May, according to a separate data report by the Labor Department. Economists predict a pronounced slowdown as the year unfolds.
“The job market continues to remain resilient, and that really has been seen since the pandemic,” said Daniel Zhao, lead economist at Glassdoor. “But that doesn’t mean that it will continue to remain resilient. There are signs of softening underneath the surface.”
The Trump administration touted June’s jobs gains on Thursday morning. A statement from the Labor Department said the report showed that President Donald Trump’s “America First policies continue to unleash historic growth and prosperity for our workers.” The House is preparing a final-passage vote on Trump’s massive tax and immigration bill later Thursday morning.
Wall Street traders hoping for interest rate cuts reacted to the June jobs figures with muted optimism.
But the report gave the Federal Reserve, under escalating attacks from President Donald Trump to lower interest rates, little reason to cut borrowing costs as the labor market continues to churn out jobs at a solid pace. Fed Chair Jerome H. Powell has said the Fed is prepared to act if the labor market sours.
“The resilience of the domestic labor market is providing the Fed the luxury of a patient, wait-and-see approach to rate cuts this year,” Jason Pride, chief of investment strategy and research at Glenmede, said in an analyst’s note.
In June, more than three-quarters of job creation came from state and local government and health care. Public sector payrolls added 73,000 jobs in June, mostly in state education. The federal government, facing cuts, has continued to lose jobs. Health care added 39,000 jobs, mostly in hospitals and nursing and residential care facilities, reflecting the aging demographics of the population.
Social assistance, which includes services for families, added 19,000 positions. Construction added 15,000 jobs, and leisure and hospitality employers created 20,000 new roles, a decrease from previous months.
Tariff sensitive industries including retail and transportation added few jobs, while the manufacturing sector shed positions. White-collar industries continued to show weak job growth, reflected in the rising unemployment rate for recent college graduates.
Job gains for April and May were revised upward in the Thursday report by a combined 16,000 positions, easing economists’ recent concerns that the labor market is weaker than headline numbers show.
There are other signs of growing labor market frailty. The civilian labor force shrank in June by some 130,000 workers. The number of long-term unemployed people grew by 190,000 to 1.6 million. The pace of hiring has also been hovering near longtime lows, according to the Labor Department. Slower hiring can have just as much of an impact on the job market as layoffs, economists say, with new and returning job seekers unemployed for longer spells.
A shrinking labor force could be the result of Trump’s restrictive immigration policies, which include a crackdown on the U.S.-Mexico border, more worksite raids and the revocation of legal status for hundreds of thousands of immigrants. Economists at the Brookings Institution and American Enterprise Institute released a report this week that said that net migration to the United States this year could be zero or negative, meaning that more people could leave the country than enter.
A lack of immigration can force employers to boost wage growth, lead to labor shortages in key industries and make it harder for Fed policymakers to understand the health of the labor market.
“There’s more risk of a policy mistake where interest rate cuts come too late,” said Zhao, the lead economist at Glassdoor. As immigrants exit, the labor market may remain on solid footing with smaller job gains, but the size of the workforce is difficult to gauge in real time.
Several major sectors are facing strong headwinds. Trump’s massive tax and immigration bill that is expected to pass the House on Thursday contains dramatic Medicaid cuts that could trigger cutbacks at hospitals and in health care jobs.
Meanwhile, the federal government has lost some 69,000 jobs since January amid mass layoffs at major agencies including the Department of Health and Human Services, the IRS and the U.S. Agency for International Development.
Tariff-sensitive industries are expected to take a sharper hit from heightened trade barriers in the coming months.
Willi’s Ski and Board, a retailer with three locations in western Pennsylvania, plans to reduce hiring by at least 10 percent when the winter sports season begins this year. “The tariffs are a big problem for a small business,” said Kjerstin Klein, a co-owner, who typically employs 150 workers each winter season. “We run on a shoestring budget, and uncertainty is a killer.”
The retailer purchases skis and snowboarding equipment from suppliers that import from Europe and Asia. Those suppliers have warned of price increases of 10 to 15 percent with Trump’s tariffs, which Klein says she has no choice but to pass on to customers. “If prices increase, demand decreases,” Klein said. “Our income will be less. Our traffic will be less. This is a self-inflicted pandemic basically.”
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