Why a Hot U.S. Job Market Cooled in June

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Alex Ossola (0:33)

US labor market slowed last month, complicating the Fed's calculus for its next rate decision. And Tesla sales are surging again. Plus, how hot is it where you live right now? High temperatures this summer are going to challenge America's electric grid.

Jennifer Hiller (0:48)

There should be a lower risk for blackouts this summer. So that is the good news. But there is always a risk. And there are just myriad problems kind of all over the place.

Alex Ossola (0:59)

It's Thursday, July 2nd. I'm Alex Ossola for The Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today.

New data out from the Labor Department today showed that the US economy added 57,000 new jobs last month. That's fewer than economists expected and a slowdown from the spring's hiring hot streak. Today's report also revised down the big job gains from May and April. One interesting tidbit, the unemployment rate dipped to 4.2%.

Harriet Torry (1:36)

From May to June, we saw this very big drop in the labor force. It decreased by about 700,000, which is a surprise. When the unemployment rate goes down, it means that people are finding jobs. But in this case, it went down from the wrong reasons, which is that there were fewer people available for work.

Alex Ossola (1:52)

That's journal economics reporter Harriet Torry. She says the share of people either working or looking for work, what's known as a labor force participation rate, fell to 61.5%.

Harriet says that reflects the fact that more baby boomers are retiring and there's fewer immigrants working because of President Trump's crackdown on immigration. Also worth noting is where jobs were coming from. The health care and social assistance sector continued to add jobs, as it has for several months. But Harriet says some experts were surprised that the leisure and hospitality sector lost more than 60,000 jobs. They thought there might be more hiring because of the World Cup.

Harriet Torry (2:29)

Some economists are saying this could also be a warning sign for the economy, that actually hiring was not as strong for the World Cup as everybody was hoping for and that maybe the lower income consumers who are really feeling the strain from inflation are going to pull back and that perhaps demand this summer is not going to be necessarily that strong.

Alex Ossola (2:47)

The softer June jobs report made investors think that the Fed is less likely to raise interest rates at its meeting later this month. They now put the odds of a July rate hike at about 20% before the report came out. That number was higher at 30%.

Stock trading was mixed. The Dow rose more than 1% and closed at its latest record, while the Nasdaq fell a bit less than 1% and the S&P was flat. All three indexes closed up more than 1.5% for the week. There's no trading tomorrow because of the July 4th holiday.

There's been a recovery at Tesla. Sales at Elon Musk's car company jumped in the second quarter after months of sluggish sales. The EV maker sold about 25% more vehicles than it did in the same period last year. Tesla's sales jump comes even though there's a wider downturn in the US EV market, with most other automakers reporting sharp sales declines for EVs. Tesla is also in the middle of a pivot, trying to focus the company on robotaxis and humanoid robots, but neither of those are currently for sale. However, Tesla stock tumbled 7.5% today, its biggest one-day decline in a year. It's still up more than 3% for the week. Tesla will report its full earnings for the quarter later this month.

The CDC says that the death rate in the US fell last year to its lowest level on record. That translates to about 689 deaths per 100,000 people. The death rate declined across every age group and nearly every demographic group. A CDC health scientist says the drop was because of a continuing decline in drug overdose deaths, as well as COVID-19 not contributing to as many deaths. But deaths from the flu and pneumonia grew, and the category is now among the nation's top 10 causes of death for the first time since 2020

Coming up, what's the biggest challenge for NATO's Secretary General, ahead of the Alliance's summit next week? The Journal sat down with him and asked. We'll get into it after the break.