US hiring slows in June; leisure jobs fall, unemployment 4.2%

The Bureau of Labor Statistics reported that U.S. nonfarm payrolls increased by 57,000 in June, well under the consensus forecast of 113,000. The unemployment rate declined to 4.2% from 4.3%.

Average hourly earnings rose 0.3% month-over-month and 3.5% year-over-year. The labor force participation rate moved down to 61.5% from 61.8% in the prior month.

Leisure and hospitality lost 61,000 jobs in June. Other sector changes included information down 9,000 and trade, transportation and utilities down 4,000. Sectors that added jobs were education and health services (+69,000), professional and business services (+36,000), construction (+11,000) and manufacturing (+3,000).

The broader underemployment rate fell to 7.9% from 8.1% in the previous report. The drop in the unemployment rate occurred alongside the decline in the participation rate.

A private payrolls report released the day before showed a gain of 98,000 jobs in the private sector, with services accounting for the bulk of those additions. The Department of Labor’s Job Openings and Labor Turnover Survey for May recorded 7.594 million job openings; education and health services had 1.539 million openings and professional and business services had 1.485 million openings.

The May payroll figure was revised to a 129,000 gain. The CME FedWatch Tool put the probability that the Federal Reserve will keep the target federal funds rate at 3.50%–3.75% at the July meeting at about 82%. For the September meeting, the tool showed a near-even split between holding rates and a move to the 3.75%–4.00% range.