US Job Growth Slows to 57,000 in June; Unemployment Rate Drops to 4.2%

US job growth decelerated sharply in June, adding just 57,000 non-farm payroll jobs, a notable decrease from the revised 129,000 jobs added in May. This slowdown occurred even as the US unemployment rate dipped to 4.2%, suggesting a stabilizing labor market. The Bureau of Labor Statistics noted that employment continued to rise in professional and business services, social assistance, and healthcare. However, the leisure and hospitality sector experienced job losses.

The number of unemployed individuals remained largely unchanged, with 7.1 million people out of work in June. A decrease in the labor force participation rate, down 0.3 percentage points to 61.5%, contributed to the stability in the unemployment rate. The number of long-term unemployed, those jobless for 27 weeks or more, stayed at 1.9 million, accounting for 27.3% of all unemployed people.

Looking at specific sectors, professional and business services saw an increase of 36,000 jobs, while social assistance added 25,000. Healthcare employment grew by 22,000 jobs, though this is below its 12-month average. Conversely, the leisure and hospitality industry lost 61,000 jobs, a trend attributed to weaker-than-usual seasonal hiring, despite the ongoing Football World Cup in the US.

While the stable jobs market offers some relief to the US Federal Reserve, persistent inflation above the 2% target remains a concern for policy decisions. The federal funds rate was recently held at 3.5-3.75%, but expectations for a rate hike this year are increasing, partly due to high energy prices, even after a drop in crude oil following an interim peace agreement between the US and Iran.

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Employment continued to trend up in professional and business services, social assistance, and health care. Leisure and hospitality lost jobs.