President Donald Trump’s trade battles, federal employment freeze, and immigration crackdown certainly contributed to the prolonged decline in U.S. hiring in June.
According to a survey of forecasts by the data firm FactSet, when the Labor Department releases job numbers for the previous month on Thursday, they are anticipated to reveal that companies, government organizations, and NGOs gained 117,500 positions in June, down from 139,000 in May.
It is anticipated that the unemployment rate will have increased slightly to 4.3%, the highest level since October 2021, although it is still low enough to imply that the majority of American workers still have stable jobs.
Compared to the booming years of 2021–2023, when the economy recovered with surprising vigor because to COVID-19 lockdowns and businesses were in dire need of people, the U.S. job market has significantly cooled. Employers have added 124,000 jobs each month on average so far this year, which is less than the 168,000 jobs added in 2024 and the 400,000 jobs added on average between 2021 and 2023.
After the Federal Reserve raised its benchmark interest rate eleven times in 2022 and 2023, hiring slowed. Contrary to popular assumptions that the increasing borrowing costs would trigger a recession, the economy did not implode. Businesses continued to hire, but more slowly.
However, the labor market appears to be under stress. According to a poll published on Wednesday by payroll processor ADP, 33,000 jobs were lost by private enterprises last month. According to ADP senior economist Nela Richardson, job losses occurred last month due to a reluctance to replace departed employees and a reticence to acquire new ones, even if layoffs are still uncommon. (The official Labor Department job count is often different from the ADP figures.)
Trump’s actions are now causing employers to deal with the impact, particularly his aggressive use of import taxes and tariffs.
According to mainstream economists, tariffs increase costs for both consumers and businesses and reduce competition, which lowers economic efficiency. Additionally, they encourage other nations to impose retaliatory tariffs, which harms American exporters.
Businesses are confused by the unpredictable manner in which Trump has implemented his tariffs, first announcing them, then postponing them, and then introducing additional ones.
According to a study conducted this week by the Institute for Supply Management, manufacturers expressed dissatisfaction over their and their customers’ reluctance to make choices until they knew the ultimate destination of Trump’s tariffs. Susan Spence, chair of the ISM’s manufacturing survey committee, stated that the whiplash must end and remain stopped.
The June job data may also reveal Trump’s attack on the federal bureaucracy. According to Oxford Economics’ chief U.S. economist Nancy Vanden Houten, a hiring moratorium, voluntary resignations, and retirements caused a 20,000-job decline in government employment last month. In a remark on Wednesday, she stated that court decisions have temporarily halted widespread federal layoffs.
By forcing immigrants out of the labor market, the president’s deportations and the fear of them are also probably going to start to affect the labor market. The largest decline in a year and a half occurred in May, when 625,000 fewer people were employed or seeking for employment in the United States.
