U.S. June payrolls rose 57,000

The U.S. labor market slowed in June as nonfarm payrolls rose by 57,000, according to the Bureau of Labor Statistics report released on July 2. The unemployment rate was 4.2%, down from 4.3% in May, while the labor force participation rate fell 0.3 percentage point to 61.5%. Prior months were revised lower, leaving a weaker picture of hiring than earlier estimates had shown. Economists and market participants focused on the contrast between the lower unemployment rate and the drop in labor-force participation. ### Why did the unemployment rate fall if hiring was weak? The unemployment rate fell to 4.2% in June even as payroll growth slowed, the BLS said, because the household survey showed weaker labor-force participation. The labor force participation rate dropped to 61.5%, and the employment-population ratio edged down to 59.0%. The number of unemployed people was 7.1 million, little changed from the prior month. (bls.gov) St. Louis Fed economists said the decline in unemployment was driven primarily by fewer people entering the labor force to look for work and more unemployed people leaving the labor force rather than continuing their search. Their analysis said flows into and out of the labor force were the main factor behind the monthly change in unemployment. (bls.gov) ### How far below expectations was the payroll number? June payroll growth of 57,000 was well below economists’ expectations of about 115,000, according to CNBC’s compilation of Dow Jones estimates. Reuters also reported that economists had expected a materially larger gain. The June figure was also below May’s revised 129,000 increase. April and May were revised down by a combined 74,000 jobs. (stlouisfed.org) St. Louis Fed analysis said April was revised to 148,000 from 179,000 and May to 129,000 from 172,000. Those revisions reinforced the view that hiring had been cooling before June’s report. ### Which industries were still adding jobs? Professional and business services added 36,000 jobs in June, CNBC reported, making it the largest contributor to payroll growth for the month. (cnbc.com) Social assistance added 25,000 and health care rose by 22,000, though the BLS said health care hiring continued to trend up rather than accelerate. Leisure and hospitality lost 61,000 jobs in June, the BLS said. (stlouisfed.org) CNBC reported that the decline reflected slower-than-usual seasonal hiring. Government employment rose by 8,000, while many other major categories showed little change. ### What does the three-month average tell readers? The June report showed a weak single-month gain, but moving averages can smooth month-to-month volatility. (cnbc.com) The St. Louis Fed said payroll growth slowed to 57,000 in June, while revisions lowered the prior two months, making the recent trend softer than earlier readings implied. (bls.gov) Analysts on social media said the three-month moving average had rebounded toward roughly 250,000 jobs, but the official BLS release and the St. Louis Fed analysis both emphasized the June slowdown and lower revised totals. Readers comparing those claims should distinguish between private commentary and the government’s monthly release. ### What else in the report matters for the next read on the labor market? (stlouisfed.org) Average hourly earnings rose 0.3% in June from the prior month and 3.5% from a year earlier, CNBC reported. A broader unemployment measure that includes discouraged workers and those working part time for economic reasons fell to 7.9%. Household employment, however, fell by 507,000 during the month. (bls.gov) The Bureau of Labor Statistics will publish the July employment report in early August, following the June release issued on July 2. That report will show whether June’s 57,000 gain was a one-month slowdown or part of a longer cooling trend in hiring. (bls.gov) (cnbc.com)