Economy adds 57,000 jobs in June; labor market continues to stabilize: CEI analysis

The labor market gained 57,000 jobs in June, while the unemployment rate remained steady at 4.2 percent. The likelihood of an interest rate cut later this year continues to go down, as the Federal Reserve now has more economic leverage to combat inflation.

CEI Senior Economist Ryan Young:

“The biggest takeaway from June’s jobs numbers is that a stable labor market gives the Fed more freedom to fight inflation without worrying about an economic slowdown. The odds of an interest cut this year are now even lower.

“There are a few warning signs, but they are minor. Although manufacturing gained 3,000 jobs in June, the sector is still down about 100,000 jobs since Liberation Day last year. The labor force participation rate decreased from 61.8 percent to 61.5 percent, though at least some of the change was due to an annual population control adjustment.

“Tariffs and the Iran war are the two biggest economic disruptors, and news was relatively quiet on both fronts in June. If they stay that way in July, the labor market should hold steady, too.”

CEI Research Fellow Sean Higgins:

“The Labor Department’s Thursday report showed that only 57,000 jobs were added in June, indicating that businesses are cutting back in the face of continued uncertainty and inflation. The sharpest blow was in leisure and hospitality, which shed 61,000 jobs in June despite it being the summer hiring season. Americans are cutting back on their vacation and family spending and the employers that rely on that are cutting back as well.

“The report also revised downward the gains for April and May by a combined 74,000 jobs, indicating the slowdown is not a sudden turn but a gradual shift. The labor force participation rate, which had long been stable, declined marginally by 0.3 percentage points to 61.5 percent in June, suggesting that more people are getting discouraged.”