The U.S. added a solid 147,000 jobs in June that pointed to resilience in the labor market, but the pace of hiring has slowed since last year as businesses grapple with trade wars and an immigration crackdown.
About half of the new jobs were created by state and local governments, taking some shine off a seemingly good report. The private sector only added 74,000 jobs, marking the smallest increase in eight months.
The unemployment rate, meanwhile, fell to 4.1% from 4.2%, but not because a flush of new jobs became available. More people dropped out of the labor force and stopped looking for work.
Companies aren’t laying many people off, but they aren’t hiring very aggressively, either. It’s taking longer for people who do lose jobs to find another.
Still, the rise in employment last month, though overstated, makes it less likely the Federal Reserve will move up its timetable on lowering interest rates. A weak report would have renewed Wall Street speculation of a July rate cut.
Economists polled by The Wall Street Journal had forecast a slender 110,000 increase in new jobs last month.
Big picture: The labor market and broader U.S. economy have come under intense strain from trade wars, but the worst is probably over. The White House is negotiating with countries to arrange new trade deals and Wall Street is looking beyond the tariffs — stocks have returned to record highs.
A new bill in Congress that cuts taxes and reduces regulations could add further momentum.
Yet the economy is still expected to grow more slowly in 2025 as it adjusts to a new era of global trade rules and a chronic labor shortage.
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