Labor Market Insights: June 2025

 

Now, here’s our labor market insights for June 2025 written by Matt Duffy:

Key Takeaways:

Last month, I looked at the labor market from two perspectives—the rearview mirror (what’s behind us) and the front windshield (what’s ahead). But sometimes, it’s the side window that tells you where you are. Unfortunately, right now, that window is foggy.

I’ve come to terms with how difficult it is to predict where we’re headed, but what’s striking today is how uncertain I am about where we are. That’s a strange and telling place to be.

Take tariffs, for example. I pulled the latest labor market data at 11:30 p.m. on June 5 and wrote this article on 8:30 a.m. on June 6. By the time you’re reading it, the tariff landscape may have shifted again – maybe more than once. Much like inflation, the full labor market impact of tariffs hasn’t shown up yet, but the drag is beginning to emerge. Employment is declining in the most tariff-sensitive sectors: manufacturing, mining, and agriculture (expect more weakness in the months ahead).

Meanwhile, today’s jobs report beat expectations, but that doesn’t mean the labor market is gaining steam. Nearly all job growth came from just two sectors: Healthcare and Hospitality. Employment elsewhere was flat, with most industries showing little to no hiring momentum. That pattern has been true for some time, leaving job seekers in other sectors increasingly frustrated.

The headline job growth number (+139,000 jobs created) may look good (it beat expectations), but a closer look tells a different story. The three-month average has now dropped below 140,000. Add in a flat labor force participation rate and a rise in short-term unemployment, and it reinforces just how uncertain things really are. The recent increase in job openings likely doesn’t reflect the full picture. Slowing immigration and an aging workforce mean the threshold for what counts as solid job creation is lower than it was even a year ago.

Here are a few key takeaways from the latest data:

• Layoffs rose to the highest level since September 2023.
  While still low by historical standards—and lower than you’d expect given the current unemployment rate—layoffs have been climbing over the past year.
• Quits fell sharply.
  The quit rate—a strong proxy for labor market confidence—dropped, signaling that workers are increasingly hesitant to leave their current jobs amid uncertainty.
• Labor force participation and the employment-to-population ratio (ages 25–54) both declined.
  This lack of momentum suggests that future unemployment increases are more likely to stem from layoffs than from new entrants into the labor force.
• Hiring ticked up slightly.
  The hiring rate in April rose to 3.5%, its highest level since last September. Still, that’s a relatively soft number (similar to 2014 when unemployment hovered around 6.5%).

In short, while headline numbers might suggest stability, the underlying data paints a more cautious and complex picture. The labor market is in a holding pattern, and no one’s quite sure how long the fog will last.

By the numbers:

• New Jobs – the U.S. added 139,000 jobs in May, down from 177,000 new jobs created in April
  • The average monthly job gains in 2025 so far is 124,000, the lowest in the post-pandemic years
    Most job gains last month came from two industries – Education & Health Services (+66,000) and Leisure & Hospitality (+48,000)
  • The industries with the largest employment declines were temp agencies (-20K), manufacturing (-8K), and retail (-6.5K)
• Unemployment remained unchanged at 4.2%
  • The first time since 2021 unemployment has been at or above 4% for eleven consecutive months
• Job openings increased to 7.4 million, up from 7.2 million the previous month
  • This time last year we had over 8 million open jobs
  • The 8th consecutive month job openings were below 8 million
• Hires ticked up to 5.6 million, up from 5.4 million the previous month
  • Exactly where we were this time last year
  • The hiring rate remains stuck at levels last seen in 2014, when the U.S. economy was still emerging from the Great Recession
• Layoffs increased to 1.8 million, up from 1.6 million the previous month
  • Job losses in the federal government continued increase, with that sector shedding 22,000 roles last month
  • Layoffs rose to the highest level since September of last year
• Quits dropped slightly to 3.2 million, down from 3.3 million the previous month
  • Quits, which are seen as a measure of worker confidence in the ability to change jobs and find another one continues to remain very steady – and very low
• Total separations increased to 5.3 million, up from 5.1 million the previous month
  • Total separations were at 5.4 million this time last year
  • Total separations have remained steady for the past 12-months
• Jobs per available worker remained steady 1:1
  • At its peak in 2022, the ratio was 2:1
• LFPR (labor force participation rate) held steady at 62.6%
  • It hit a high of 67.3% in early 2000 and fell to 63.3% in the month before the onset of the pandemic

 

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