The unemployment rate unexpectedly ticked down to 4.2 percent in June while the economy added 57,000 jobs, data from the Department of Labor said Thursday.
Economists had forecast 114,000 jobs and a steady unemployment rate, according to a survey by Econoday.
The prior month’s figure was revised down to 129,000 from 172,000. April was revised from 179,000 to 148,000. As a result of these revisions, payrolls are 74,000 smaller than previously thought.
The private sector added 49,000, falling very short of the consensus forecast for 123,000 jobs.
The labor market in the U.S. has experienced a significant shift away from dependence on an immigration-driven workforce. Jobs numbers that may seem anemic compared with recent years may actually indicate healthy—even robust—growth under current conditions, according to economists.
Many economists now estimate the so-called “break-even” rate of job growth—the rate required to keep unemployment from rising—may be as low as zero. By contrast, when immigration was running at higher levels from 2021 through 2024, the economy needed to add more than 100,000 jobs monthly to keep pace with labor-force growth.
Retirements are also driving down the growth of the labor force, as an increasing number of members of the large baby boom generation leave work and, later, smaller generations fail to fully replace them.
Professional and business services employment rose by 36,000. Healthcare and social assistance added 46,600.
Leisure and hospitality employment fell by 61,000 in June, an indication that the seasonal adjustment used by the Labor Department expected much stronger summer hiring. Before seasonal adjustments, this sector added 373,000 jobs.
Manufacturing employment edged up by 3,000, with a gain of 6,000 in durable goods partially offset by a contraction of 3,000 in nondurable goods. Construction added 11,000.
Government employment rose by 8,000. Federal government payrolls, which have been contracting under the Trump administration’s government efficiency policies, rose by 2,000. State and local government employment rose by 6,000.
The average hourly earnings for all employees rose by 13 cents, or 0.3 percent, to $37.64. Over the year, hourly wages are up 3.5 percent. The average workweek was unchanged at 34.3 hours in June. In manufacturing, however, the average workweek edged down to 40.3 hours, and overtime edged up to 3.2 hours.
The decline in the unemployment rate was driven by a drop in the number of people in the labor force. The labor force declined by 720,000, from 170.078 million in May to 169.358 million in June, seasonally adjusted.
Over the past year, the non-seasonally adjusted foreign-born labor force has declined by 700,000, reflecting the Trump administration’s crackdown on illegal immigration. The number of foreign born men in the labor force has declined by 970,000 while the number of women is up 271,000. The native-born labor force has declined by 445,000, reflecting an aging population. As with the foreign-born labor force, the number of men has declined while the number of women has increased. Foreign-born employment has declined by 506,000 to 30.7 million. Native born employment is down 655,000 to 132 million. The foreign-born civilian population fell by 571,000, from 49.135 million to 48.564 million. The native-born population rose by 2.152 million, from 224.450 million to 226.602 million.