- US nonfarm payrolls rose by 57,000 in June, showing slowed hiring growth
- Unemployment rate dropped to 4.2% amid a sharp decline in labor force participation
- Leisure and hospitality sectors experienced the largest job losses since 2020 in June
US hiring slowed sharply in June even as the unemployment rate fell, curbing some of the budding momentum in job growth this year.
Nonfarm payrolls increased 57,000 last month after downward revisions to the prior two months, according to Bureau of Labor Statistics data out Thursday. The unemployment rate fell to 4.2% as labor force participation plunged.
The report suggests the labor market still faces some challenges despite signs of strength in recent months. While consumer spending has been resilient in the face of the energy shock from the Iran war, Americans are pessimistic about high prices and wages that aren't keeping up with inflation, which may also be keeping employers cautious about hiring.
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The pullback in hiring was led by the biggest decline in leisure and hospitality payrolls since 2020. The retail trade and information sectors also shed jobs, while healthcare and social assistance continued strong hiring.
S&P 500 futures rose, while Treasury yields fell. Investors also scaled back bets on a Federal Reserve interest-rate increase this year.
The participation rate — the share of the population that is working or looking for work — dropped to 61.5%, the lowest level in more than five years, according to Thursday's report. The BLS said when accounting for population adjustments, it was little changed from a year earlier.
Participation for so-called prime-age workers between the ages of 25 and 54 dropped to 83.3%, matching the lowest level since 2023.
Sector Breakdown
Manufacturing and construction payrolls rose in June. Many economists have pointed to the data-center buildout as a possible driver of demand for construction labor in 2026, even as homebuilding continues to be restrained by elevated interest rates.
At the same time, some Big Tech companies like Meta Platforms Inc. and Microsoft Corp. are reducing headcount, in part to offset heavy spending on artificial intelligence. Information payrolls continued to decline, marking the 17th drop in the last 18 months.
Employment in the financial activities sector, another key employer of white-collar workers seen as among the most vulnerable to automation, was little changed.
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Average hourly earnings rose 3.5% from a year earlier. Economists are paying close attention to how labor supply and demand dynamics are impacting pay — especially as inflation begins to outpace wage growth in a slew of sectors.
Consumer sentiment is recovering somewhat now that US-Iran peace negotiations have resumed and oil prices have tumbled, which may encourage employers to ramp up hiring in the months to come.
Separate data out Thursday showed applications for unemployment benefits were little changed last week. Layoffs have remained low in recent years, contributing to what economists have described as a “low-fire, low-hire” labor market.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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