Jobs report: U.S. labor market beats expectations with healthy rate of hiring in June
Hiring rose modestly from a revised 144,000 in May and beat economists expectations of fewer than 118,000 new jobs and a rise in the unemployment rate.
The U.S. job market has cooled considerably from red-hot days of 2021-2023 when the economy bounced back with unexpected strength from COVID-19 lockdowns and companies were desperate for workers. So far this year employers have added an average 124,000 jobs a month, down from 168,000 in 2024 and an average 400,000 from 2021 through 2023.
Hiring decelerated after the Federal Reserve raised its benchmark interest rate 11 times in 2022 and 2023. But the economy did not collapse, defying widespread predictions that the higher borrowing costs would cause a recession. Companies kept hiring, just at a more modest pace.
But the job market increasingly looks under strain. A survey released Wednesday by the payroll processor ADP found that private companies cut 33,000 jobs last month. 'Though layoffs continue to be rare, a hesitancy to hire and a reluctance to replace departing workers led to job losses last month,' said ADP chief economist Nela Richardson. (The ADP numbers frequently differ from the Labor Department's official job count.)
Employers are now contending with fallout from Trump's policies, especially his aggressive use of import taxes—tariffs.
Mainstream economists say that tariffs raise prices for businesses and consumers alike and make the economy less efficient by reducing competition. They also invite retaliatory tariffs from other countries, hurting U.S. exporters.
The erratic way that Trump has rolled out his tariffs—announcing and then suspending them, then coming up with new ones—has left businesses bewildered.
Manufacturers responding to a survey released this week by the Institute for Supply Management complained that they and their customers were reluctant to make decisions until they understood where Trump's tariffs would end up. 'That whiplash has to stop and it has to stay stopped,' said Susan Spence, chair of the ISM's manufacturing survey committee.
Trump's assault on the federal bureaucracy could also show up in June's job report. Nancy Vanden Houten, lead U.S. economist at Oxford Economics, expects federal jobs dropped by 20,000 last month, 'reflecting a hiring freeze, voluntary quits and retirements.' For now, she wrote in a commentary Wednesday, court rulings 'have put massive federal layoffs on hold.'
The president's deportations—and the threat of them—also are likely to start having an impact on the job market by driving immigrants out of the job market. In May, the U.S. labor force—those working and looking for work—fell by 625,000, the biggest drop in a year and a half.
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The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should. So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Manitowoc Company (NYSE:MTW). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Manitowoc Company with the means to add long-term value to shareholders. 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It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
