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

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

The figures suggest businesses remain wary of the economy’s health, with inflation at a three-year high and consumer confidence near post-pandemic lows. The job market has been stuck in a ‘low-hire, low-fire’ rut in which the employed enjoy some job security with lay-offs low, but those out of work are struggling to get hired. Strong hiring in the spring raised hopes the economy was escaping that dynamic, but Thursday’s report suggests job gains are still muted.