‘Fizzle more than sparkle’: June jobs report fails to deliver 4th of July fireworks
The June jobs report didn’t just miss expectations; it also confused the story that economists were discussing about the labor market possibly increasing rapidly in the summer. Payrolls rose by just 57,000, and both April and May were updated by a combined 74,000 jobs, meaning the recent pace of hiring looks weaker in retrospect than when these reports were first released. That’s important because a review can change the signal from a one-month surprise to a broader bearish pattern.
In a statement sent to Good luckGlassdoor Chief Economist Daniel Zhao said the report “set off fireworks” and left the labor market looking “more dull than bright,” arguing that the drop in the unemployment rate to 4.2% is less convincing than it appears because it is due to a drop in the number of workers, not 61% hiring.
LPL’s Chief Financial Economist, Jeffrey Roach, quickly did the math and noted that it means another 2.5 million people have stopped working since last year. Pulling back further, it means Americans out of work rose to 105.8 million, “which is likely due to people giving up looking for work,” which he called “a concerning trend.” The bottom line for Roach, he wrote, is that firms are still adding to wages, but hours worked are below pre-pandemic levels as firms cut back.
Glassdoor’s Zhao also noted that wage growth reached 3.5% year over year, still strong enough to keep inflation concerns alive as job creation cools.
Industry data reinforces that mixed picture. Zhao pointed out that leisure and hospitality lost 61,000 jobs in June, and accommodation, food services and related sectors all declined, while only small pockets such as temporary help and other local government roles saw gains associated with event workers. In other words, the report did not show broad-based power; showed a number of very small offsets to reverse the major weakness.
Jamie Cox, Managing Partner of Harris Financial Group, found himself skeptical: “This data is misleading and should be ignored,” he said. “There are no recreational opportunities and misbehavior is poorly documented during the World Cup.” He predicted higher revisions in the next few months.
Janus Henderson Investors, Bradford Smith, described earnings as “softer than expected” and noted that the June figure was the weakest since February. He added that a soft labor base, combined with moderate oil price declines, likely leaves the Federal Reserve on hold at the next meeting.
Similarly, Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management, called the report a “big change” with “much fewer jobs created than expected,” while the happy months numbers were revised down.
Taken together, the reaction suggests a labor market that is still growing, but only modestly, and one that gives policymakers little reason to worry about overheating. That makes the aftermath of the holiday week look less like a place for policy change and more like a slow, uneven summer.
