June jobs report: US adds just 57,000 jobs, badly missing expectations

The latest jobs report was much less impressive than those from the last few months. Job growth sharply missed expectations. Unemployment inched down, but labor force participation dropped, too. The median weeks unemployed people were out of a job dropped to 11.0, and the share of unemployed people who were long-term unemployed didn't change much.

Leisure and hospitality's strength in May disappeared in June. Healthcare still added jobs, but by a smaller amount than in the past few months.

Still, the job market isn't in dire straits just yet.

"The unemployment rate remains in good territory, as does the slow, steady growth in jobs amid demographic changes and some economic uncertainty," Elizabeth Renter, senior economist at NerdWallet, said in commentary.

"Despite June delivering a softer than expected payrolls reading, the US added an average of 111k jobs over the past quarter extending the trend of firm employment data," Ryan Weldon, investment director and portfolio manager at IFM Investors, said in commentary.

Major indexes were higher as investors took in the latest report. A weaker-than-expected job market has nudged Fed rate-hike odds lower. The two-year Treasury yield, which is the most sensitive to Fed policy, dropped six basis points immediately after the report.

The market now sees an 82% chance that the Fed keeps rates unchanged at its July meeting, according to CME FedWatch, up from a 68% probability before the jobs report. The odds that the Fed will keep rates steady all year also ticked up to 25%, from 16%.

Chip stocks, which endured a brutal round of selling this week, also jumped. Here were some of the most notable moves:

• Micron: +2%
• Intel: +2%
• AMD: +1%

Hourly earnings saw another modest increase in June, growing to $37.64 — a 0.3% increase. Overall, wages have grown 3.5% year-over-year.

On its face, that might seem like good news for workers: A raise means more money in their pockets. But those gains may not be enough to keep pace with rising prices. The latest consumer price index reading, which tracked inflation in May, came in at 4.2%. That marked the second month that inflation outpaced wage growth.

June CPI data will be released on July 14.

"Healthcare is expected to account for the bulk of job gains, with leisure and hospitality receiving a modest lift from World Cup-related activity," EY economist Gregory Daco said in commentary. "Meanwhile, retail, professional and business services, and manufacturing are likely to post modest employment declines."

Daco said hiring has been highly selective, but job growth has improved since last year's weakness.

Morgan Stanley Research expects job growth to moderate from the 114,000 average between January and May to gains between 50,000 and 60,000 a month over the summer, which would mean roughly steady unemployment.

"Should payroll gains outperform our expectations and push the unemployment rate below the median FOMC participants' estimate of the longer run neutral rate (4.2%), then the Fed may decide a more restrictive stance is needed to prevent labor market overheating," the report said.

"If we're lucky, we may have passed the worst point of the job market for people in their early 20s," economist Guy Berger said on LinkedIn. He said unemployment among 20-somethings is down from a year ago, with improvements across educational attainment levels.

"This isn't surprising as the job market is warming up a little this year, and I'd typically expect young people to be the primary beneficiaries of such warming," he added.

The story isn't the same for teenagers, though, where unemployment continues to be high. "The worst, weakest corner here is youngsters with a high school diploma and some college but no degree," Berger said. Unemployment for 18- to 19-year-olds in general was 13.3% in May, up from 12.8% a year ago.

New results from The Conference Board's Consumer Confidence Survey found 22.5% said it's hard to get a job, the highest since January 2021.

"Consumers anticipate little change in the labor market six months from now. This was offset by improving expectations for business conditions and incomes," Dana Peterson, the chief economist at The Conference Board, said in commentary.

The New York Fed Survey of Consumer Expectations also shows people aren't feeling too confident about their prospects. The average probability of finding work in the next three months if their job was lost today dropped in May. Among income groups, the likelihood dropped the most for people making less than $50,000, to the lowest chance since the survey began in 2013.

To avoid being overwhelmed by the pressures of job searching, career coach Emily Worden recommends job seekers keep a four-hour daily schedule, with one or two hours dedicated to applications, 30 minutes to an hour commenting on LinkedIn, and one to two hours networking.

"Each day is going to fluctuate depending on whether you see more jobs you like or if you have some more networking to do, but that shouldn't take eight hours," she said in an as-told-to essay.

Finding a job might take a while, and it might not be through a job board. Michelle Keller landed a role about a year after a layoff, after a friend told Keller that her employer was hiring. Keller likened the job market to the dating market. "Your best bets are the people you know in your circle. If you're young and just finishing school, get to know your parents' circle because those are the people who have the jobs," she said.

If you are searching the web for jobs or keeping an eye on recruiter emails, be cautious of potential job scams, such as too-good-to-be-true pay.

Federal Open Market Committee members will meet July 28 and 29 to make the next interest rate decision, the second call under Kevin Warsh. The Fed decided at the June meeting to keep rates steady.

Members can use the new job estimates to help inform their decisions. Warsh said at June's press conference that the data has "been moving in a good direction" and that the Committee considered the job market as stable.

CME FedWatch, which shows the likelihood of Fed moves, showed a roughly 70% chance of rates staying the same, with a 30% chance of a hike. The likelihood of rates remaining unchanged dipped after the Fed's June meeting. The quarterly economic projections released alongside the Fed's June decision showed nine members project at least one rate hike by the end of the year. Warsh didn't partake in projections.

With a shortened trading week due to the July 4th weekend, US investors were cautious on Thursday morning. US stock futures were broadly flat, with the Nasdaq falling 0.2%, the Dow Jones up 0.25%, and the S&P 500 less than 0.1% higher.

After months of surprisingly resilient hiring reinforced expectations for further Fed rate hikes, a report this week showing weaker private-sector payrolls has cast doubt on that outlook.

Oil prices also slipped as traders weighed the possibility of easing supply risks in the Middle East against ongoing geopolitical uncertainty. Meanwhile, Asian semiconductor stocks declined following a sharp overnight sell-off in US chipmakers.