Job market surprisingly stable this year

Halfway through the year, the labor market is exhibiting a virtue that will remain elusive for much of 2025: stability. U.S. hiring isn’t exactly booming yet in 2026, but it’s generally improving.

The latest data released by the U.S. Department of Labor on Thursday was disappointing. June’s 57,000 new jobs Well below Wall Street forecasts. Sectors that reflect the current health of the economy, including retail, leisure and hospitality, are seeing job losses.

However, beyond the monthly numbers, the job market has been steadily, if not spectacularly, adding about 92,000 jobs per month so far this year. That’s a huge jump from the average net loss of 8,000 people per month in the second half of 2025.

This is not a repeat of the unstoppable wave of job creation seen in the post-pandemic years. But solid monthly job creation and stronger staffing across industries keep job market concerns well below weak hiring late last year.

Then there’s the unemployment rate: It actually fell to 4.2% in June from 4.3%, even though hiring was lower than expected. On the surface, this is good news, but not for the best reasons.

Data on Thursday showed the unemployment rate fell as an unusually large drop in the number of Americans employed or looking for work. and There are fewer and fewer people in the job marketthe unemployment rate will fall even as the number of jobs created is falling.

Economists are scratching their heads over what exactly caused this month’s sharp drop in workers. Many said they believed it was a statistical fluke that could be reversed in the coming months.

They do agree on one thing: The size of the workforce has been stagnant for months. The retirement of baby boomers may be one reason. The withdrawal of immigrants from the labor market during immigration crackdowns may be another reason. In June, there were approximately 169 million people in the private labor force, a decrease of nearly 2.2 million from the peak in November.

Still, it’s a job market that many economists and investors would have welcomed six months ago, when monthly hiring was inconsistent and tended to be concentrated in areas like education and health care. Over the past few months, more industries have added jobs than lost them. A year ago, the opposite was true.

“We’ve been building momentum” throughout the spring, said Nela Richardson, chief economist at ADP, a human resources and payroll processing company. “We didn’t get that this month, but what we got was a lot of stability,” she said, referring to June.

Aditya Bhave, an economist at Bank of America, said reduced pressure on federal economic policy has made companies more willing to shift to hiring mode.

Twelve months ago, businesses faced steep new tariffs and Congress was wrapping up tense negotiations over President Trump’s tax cut bill. Now, companies are landing Customs duty refundtax cuts may have supported consumers and businesses.

“We went through a period of policy uncertainty last year,” Buff said. “Those stories are now no longer in the background and the broader labor market has the ability to pick up.”

Despite rising inflation, many businesses are finding that consumers are spending freely, especially wealthy customers who have benefited from a surge in the stock market.

The Biltmore Estate in Asheville, N.C., a mansion museum where tours start at $80, will see double-digit growth in visitors this summer, in part reflecting the region’s tourism industry, marketing executive Mark Hemphill said Recovery from Hurricane Helenthis happened about two years ago. Hemphill said middle-class visitors are still waiting for travel deals, but museums have added staff to meet strong demand from wealthy visitors.

“There is a clear divide between more affluent travelers and more value-conscious mid-market travelers,” Hemphill said.

Heading into the summer, the labor market faces questions about the number of people available to work and the willingness of businesses to hire more workers.

When July data is released next month, economists will be watching closely for confirmation that the June labor force decline was not the start of a trend.

At the same time, steady growth in spending across the economy is giving businesses more reason to add workers. Amid a boom in investment in artificial intelligence infrastructure, the construction industry has added jobs in five of the last six months after experiencing uneven hiring last year. Consumer spending performed well, rising 2.1% on an inflation-adjusted basis in the 12 months to May, although some economists and business owners worry that rising inflation could force shoppers to tighten their budgets.

Stu Feldschuh, owner of Snow Ice Cream in Riverhead, N.Y., has identified some weaknesses in the local economy. He said more teenagers are applying for shifts this summer than ever before, a possible sign that opportunities are dwindling for young workers in Long Island’s posh beach towns. Despite facing higher business costs, Feldsch has decided not to raise menu prices this season, cautiously turning away customers weary of inflation.

Still, sales have started strong since Memorial Day. “I’m busier than ever,” he said.

Write to Matt Grossman: matt.grossman@wsj.com