U.S. job growth decelerated sharply in June, with only 57,000 new positions added, roughly half of the anticipated figure. The labor force contracted significantly, marking a sobering departure from earlier strong reports on employment health.
Despite the unemployment rate holding steady at 4.2%, underlying labor market conditions showed weakness. The labor-force participation rate declined to 61.5%, hitting its lowest point since early 2021. Employment fell by 507,000 while the overall civilian labor force shrank by 720,000, highlighting a pullback in both job seekers and workers.
The effects were uneven across industries. Professional and business services expanded modestly with 36,000 jobs added, while health care and social assistance also contributed gains. In contrast, the leisure and hospitality sector experienced significant seasonal job losses, shedding 61,000 positions as hiring cooled. These figures suggest growing sectoral imbalance within the labor market.
Revisions to previous months’ data further underscored a softening trend. April and May payroll figures were lowered by a combined 74,000 jobs, which deepened the sense of a cooling job market heading into the summer.
Financial markets reacted accordingly, with U.S. stock futures rising and Treasury yields easing after the report’s release. Traders subsequently reduced bets on imminent interest rate hikes, responding to the weaker labor market signals.