US employers pulled back on hiring last month and added only 57,000 jobs, less than half the previous month’s total and a sign companies still have a cautious economic outlook.

Economic Outlook

The Labor Department said Thursday that the unemployment rate declined to a low 4.2% from 4.3% in May, though the decline mostly occurred because many people out of work gave up looking and were no longer counted as unemployed.

The figures suggest companies remain wary of the economy’s health, with inflation at a three-year high and consumer confidence near post-pandemic lows. The solid job gains that were initially reported in April and May were also revised lower.

The economy is growing modestly despite ongoing challenges. It expanded at a 2.1% annual pace in the first three months of the year, though some forecasts expect it will slow in the April-June quarter.

Some economists expect a stronger figure as companies have adjusted to a series of challenges — higher tariffs, the Iran war, widespread artificial intelligence investment — and are increasingly confident that the economy will keep growing.

Inflation is at a three-year high of 4.2%, lifted by spiking gas prices, and that has eroded Americans’ incomes. Inflation-adjusted after-tax incomes were flat in May from a year earlier, which could discourage some consumers from spending.

A healthy labor market that can continue to generate jobs should enable many consumers, particularly upper-income ones, to remain resilient and spend more, boosting the economy.

Original reporting: NBC Connecticut — read the source article.