U.S. employers added 223,000 jobs in June as the economy maintained a steady if underwhelming pace of growth, the Labor Department reported on Thursday.

ADVERTISEMENT

The unemployment rate fell to 5.3 percent last month — a seven-year low — from 5.5 percent in May but only because people stopped looking for work, sending the labor force participation rate down to a 38-year low.

While jobs growth is maintaining a steady pace — 221,000 jobs on average were added over the past three months — there was some disappointing data.

There were 60,000 fewer jobs created in April and May than initially reported.

The number of people in the labor force fell by 432,000, a reason for the lower jobless rate, while 56,000 fewer people were employed, sending the participation rate down to 62.6 percent, the lowest level since 1977.

Labor Secretary Thomas Perez Thomas Edward PerezClinton’s top five vice presidential picks Government social programs: Triumph of hope over evidence Labor’s 'wasteful spending and mismanagement” at Workers’ Comp MORE said the drop in the participation rate is more about June's slower pace of those getting into the workforce — like teenagers starting summer jobs — and not a case of discouraged workers.

“I’m very heartened by the fact that this isn’t about discouraged workers. This is about the pace of entry largely in the workforce,” he said on CNBC’s "Squawk on the Street."

He said if there was evidence that more people stopped looking for work, he would have been "more worried" about the report.

June is typically one of the biggest months for employers adding to payrolls, mostly because teenagers are picking up summer jobs.

“When compared to 1977, our population is much older now, so that comparison is slightly misleading in that sense,” Perez said.

Austan Goolsbee, a University of Chicago economics professor and former chairman of the Council of Economic Advisers, reminded on Twitter that with baby boomers hitting retiring age, it is expected that the labor force participation rate will keep hitting record lows for the next 12 years, at least.

Meanwhile, the number of unemployed fell by 375,000.

Job growth was centered in the service sector — retailers added 33,000 jobs; the healthcare sector tacked on 40,000; while leisure and hospitality jobs increased by 22,000.

Manufacturing only added 4,000 jobs, while construction employment was unchanged in June.

Wages, another closely watched indication of the economy’s growth, were flat last month.

— This report was updated at 9:56 a.m.