Slow Grow

A leaky labor force tries to power through in an uncertain economy

U.S. job growth slowed sharply in June and payroll gains for the prior two months were revised lower, pointing to a cooling labor market and prompting financial markets to dial back expectations for a near-term interest rate hike from the Federal Reserve. 

While the Labor Department's closely watched July 2 employment report showed the unemployment rate dropped to 4.2% last month from 4.3% in May, that was due to 720,000 people leaving the labor force, which pushed down the participation rate to the lowest level in more than five years. 

Meanwhile, both total nonfarm payroll employment (+57,000) and the unemployment rate (4.2 percent) changed little in June. Employment continued to trend up in professional and business services, social assistance, and health care. Leisure and hospitality lost jobs.