By CHRISTOPHER RUGABER, AP Economics Writer<\/p>\n
WASHINGTON (AP) \u2014 U.S. employers slowed hiring last month and added only 57,000 jobs, less than half the\u00a0previous month\u2019s total<\/a>\u00a0and a sign companies still have a cautious economic outlook.<\/p>\n The Labor Department\u00a0said Thursday<\/a>\u00a0that the unemployment rate declined to a low 4.2% from 4.3% in May, though the drop mostly occurred because many people out of work gave up looking and were no longer counted as unemployed.<\/p>\n The figures suggest businesses remain wary of the economy\u2019s health, with inflation at a\u00a0three-year high<\/a>\u00a0and consumer confidence near\u00a0post-pandemic lows<\/a>. The job market has been stuck in a \u201clow-hire, low-fire\u201d rut in which the employed enjoy some job security while layoffs are low, but those out of work are struggling to get hired. Strong hiring in the spring raised hopes the economy was escaping that dynamic, but Thursday\u2019s report suggests job gains are still muted.<\/p>\n \u201cWe are in a market that is still very fragile, and still susceptible to shocks happening,\u201d Nicole Bachaud, labor economist at ZipRecruiter, said. \u201cThere is still a lot of hesitation on the part of employers and workers themselves to make any moves.\u201d<\/p>\n Hiring has improved from last year, when employers added fewer than 10,000 jobs a month, on average. In this year\u2019s first half the pace improved to 92,000. Yet healthy job gains that were initially reported in April and May were revised lower, from 172,000 down to 129,000 in May and from 179,000 to 148,000 in April.<\/p>\n Restaurants and bars cut jobs last month, despite World Cup<\/p>\n Restaurants, bars, and hotels cut 61,000 jobs, a sharp disappointment for those who expected the World Cup tournament that is taking place in multiple U.S. cities would lead to at least temporary job gains. Retailers also shed 7,500 jobs.<\/p>\n Chad Moutray, chief economist at the National Restaurant Association, said member companies are seeing signs consumers are pulling back on eating out, particularly outside higher-income households. It reflects a \u201cK-shaped\u201d economy, where wealthier households pull ahead of middle- and lower-income ones.<\/p>\n \u201cWe continue to hear that a lot of Americans are struggling to make ends meet,\u201d he said. \u201cIf you\u2019re catering to the upper-end of the K, you\u2019re doing fine. If you\u2019re catering to the lower part of the K, you\u2019re seeing some challenges in the last couple of months.\u201d<\/p>\n Many Americans worry about the impact of artificial intelligence on employment, but for now AI may actually be adding jobs. Last month professional and business services, a category that includes architecture, engineering, and software development \u2014 occupations expected to be vulnerable to AI \u2014 added 36,000 jobs. Healthcare, the economy\u2019s most consistent job creator, added nearly 47,000 positions.<\/p>\n Construction firms added workers, possibly because of AI buildout<\/p>\n Blue-collar industries added a modest number of jobs, with manufacturers adding 3,000 positions and construction firms 11,000.<\/p>\n Scottsville, New York-based Power & Construction Group added some of those jobs as it seeks to keep up with the demand for greater electrical capacity in the state. Thomas \u201cMurph\u201d Murphy, the company\u2019s vice president, said they are looking to hire another 15-20 workers after adding 47 in the past two months.<\/p>\n The company is seeking more electricians, laborers, and heavy equipment operators to join the 350 workers on staff, Murphy said.<\/p>\n Murphy said his company is competing for workers with firms building data centers in other states \u2014 not many are being built in New York \u2014 and he has to work to convince young people to choose construction as a career. The firm recently built a training center to bring newer, younger workers up to speed.<\/p>\n \u201cThe grid can\u2019t handle all the new power that everybody\u2019s using,\u201d Murphy said, noting the increase in laptops, phones, and tablets in many Americans\u2019 homes. \u201cWe need to continuously build the grid. But it does take time.\u201d<\/p>\n Jobs data could keep Federal Reserve on sidelines<\/p>\n Thursday\u2019s report suggests that hiring and wage gains aren\u2019t accelerating enough to worsen inflationary pressures in the economy, which could allow the Federal Reserve to keep its key rate unchanged at its current level of about 3.6%.<\/p>\n Previously, many Wall Street investors had expected the central bank to lift its key rate this year as hiring appeared to be accelerating. The prospect of no rate cuts lifted the stock market in mid-morning trading, with the broad S&P 500 index up 0.7%.<\/p>\n \u201cToday\u2019s data hit the sweet spot for markets \u2014 strong enough to keep worries about growth at bay, but soft enough to reduce the probability of a rate hike,\u201d said Eric Winograd, chief U.S. economist at AB Global, an asset management firm.<\/p>\n