US employers significantly slowed their hiring in June, adding only 57,000 jobs, less than half of May's total. This indicates a continuing cautious outlook among businesses, grappling with inflation at a three-year high and near post-pandemic low consumer confidence. The Labor Department also revised down job gains for May to 129,000 (from 172,000) and April to 148,000 (from 179,000).
The slowdown was particularly notable in the leisure and hospitality sector, with restaurants, bars, and hotels cutting 61,000 jobs, despite expectations of a boost from the World Cup. Retailers also shed 7,500 jobs. However, professional and business services, including architecture, engineering, and software developers, added 36,000 jobs, and healthcare gained nearly 47,000 positions.
The unemployment rate saw a slight decline to a low 4.2% from 4.3% in May, but this was largely due to people giving up their job search. The modest job gains, however, suggest that the Federal Reserve's key interest rate, currently around 3.6%, might not be sufficient to curb inflation. Fed chair Kevin Warsh reiterated his commitment to bringing inflation down to the 2% target.
Economists note a potential mismatch in the labor market, with companies seeking more senior, experienced workers, while job seekers lean towards entry-level positions. This, coupled with fewer people quitting their jobs compared to post-pandemic trends, makes it harder for businesses to recruit experienced staff and entry-level workers to find employment. The U.S. workforce is barely growing due to retirements and reduced immigration, suggesting that even smaller job gains might be enough to stabilize or lower the unemployment rate.
