WASHINGTON — Recent U.S. labor market reports point to a gradual cooling in hiring while layoffs remain relatively limited, suggesting employers are becoming more cautious after stronger employment gains earlier this year.
The U.S. economy added 57,000 nonfarm jobs in June, well below the pace recorded in previous months, while the unemployment rate edged down to 4.2%, according to the Labor Department's latest Employment Situation report. The Bureau of Labor Statistics also revised April and May payroll gains down by a combined 74,000 jobs, indicating hiring was weaker than initially estimated.
The June report showed employment continued to increase in professional and business services, health care and social assistance, while leisure and hospitality lost jobs. Average monthly payroll growth over the previous 12 months stood at about 36,000 jobs, reflecting a slower expansion than in earlier stages of the economic recovery.
Despite softer hiring, broader indicators suggest the labor market has not experienced a significant increase in layoffs. Initial claims for state unemployment benefits fell to 215,000 in the week ending July 4, according to the Labor Department, remaining within the range associated with a relatively healthy job market.
Economists said the combination of slower hiring and stable layoffs points to a labor market that is cooling gradually rather than deteriorating sharply. Several analysts noted that employers appear to be limiting new recruitment while largely retaining existing workers amid elevated borrowing costs and continued policy uncertainty.
The decline in the unemployment rate was accompanied by a lower labor force participation rate, indicating that fewer people were actively seeking work. The Bureau of Labor Statistics said the number of people marginally attached to the labor force changed little during the month.
The labor market remains a central focus for Federal Reserve policymakers as they assess inflation and economic activity. Separate data released by the Federal Reserve Bank of New York showed consumers' perceptions of labor market conditions improved modestly in June even as near-term inflation expectations increased.
Markets and economists are expected to closely monitor upcoming inflation data and the next monthly employment report for further evidence on whether the slowdown in hiring persists. The Bureau of Labor Statistics has scheduled publication of the July employment report for Aug. 7.
