The US hiring slowdown is taking a toll on recruiting firms, with two filing for bankruptcy in recent weeks

The U.S. economy added 147,000 jobs in June, surpassing economists’ expectations, according to data from the U.S. Bureau of Labor Statistics. The national unemployment rate ticked down slightly to 4.1%, after holding at 4.2% for the previous three months. Consistent job growth and a stable unemployment rate support continued economic expansion, though early signs of softening warrant close attention.

“The positive news we saw in the latest jobs report helps offset potential concerns raised by other recent data,” said Rob Haworth, senior investment strategy director at U.S. Bank Asset Management Group.

One notable area of strength came from government employment, which added 73,000 jobs in June—well above analyst forecasts. Most of the gains were in government-funded education roles. The education and health services sector, which has consistently led in job creation, contributed 39,000 new positions. Social assistance roles also grew by 19,000. Other major sectors showed little change.

“Job openings appear to be most prevalent in education and health services,” said Tom Hainlin, national investment strategist at U.S. Bank Asset Management Group. “In this report, in particular, state and local governments filled a lot of education jobs.”

Unemployment Remains Stable

After more than two years below 4%, the unemployment rate rose to 4.0% in May 2024 and edged up to 4.2%, before easing slightly to 4.1% in June. These figures remain within a range considered normal by historical standards.

Job openings remain relatively high at 7.8 million. “Companies are searching for people and hiring them,” Haworth noted. “It appears that businesses are holding on to current employees and continuing to seek new hires.” According to the latest Employment Situation Summary, about six million Americans are actively looking for work—fewer than the number of available job openings.

“Initial jobless claims are in line with seasonal norms when compared to recent years,” said Bill Merz, head of capital markets research at U.S. Bank Asset Management Group. “Interestingly, continuing jobless claims have increased slightly, suggesting that landing a new job may be becoming more difficult.”

Labor Force Participation Slips

Another closely watched metric is the labor force participation rate, which fell by 0.1 percentage points in June to 62.3%. That’s down from a recent peak of 62.8% in November 2023.

“The recent contraction in labor force participation is not a good sign,” said Haworth. “But so far, the potential drop in available labor supply hasn’t resulted in upward pressure on labor costs.”