Job Growth Slows; MBA’s Fratantoni Weighs In

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The Bureau of Labor Statistics’ employment report for June showed a slowdown in job growth, with a gain of just 57,000 and a downward revision to the prior two months of 74,000 jobs.

“Moreover, the job gains remain particularly concentrated in just a few sectors, notably health care,” MBA Senior Vice President and Chief Economist Mike Fratantoni said. “This month, there was a loss of 61,000 leisure and hospitality jobs, a surprise given the World Cup crowds. And yet, a negative surprise in just this sector was enough to bring down the national total.”

Fratantoni noted the unemployment rate declined to 4.2% in June. “But this was primarily due to a three-tenths decline in the labor force participation rate. 832,000 fewer people were in the labor force in June than in May. This reduction in the denominator lowered the unemployment rate,” he said.

Wage growth increased slightly to 3.5%, but remains below the level of inflation, so workers’ incomes are not keeping up with the cost of living.

“Overall, this report shows a job market that is a bit shakier than the May data had indicated, but inflation still remains too high,” Fratantoni said. “MBA expects the Federal Reserve will keep the federal funds rate unchanged through the remainder of this year, but anticipates that their next move will be a hike in early 2027.”