Key facts
- The U.S. economy added 57,000 jobs in June, falling short of economists' expectations.
- The unemployment rate decreased to 4.2% in June.
- The labor force participation rate declined in June.
- The leisure and hospitality sector lost 61,000 jobs in June.
- The construction sector added 11,000 jobs in June, primarily in non-residential categories.
- Market expectations for a July Federal Reserve rate hike have significantly decreased.
The U.S. economy added just 57,000 jobs in June, a significant miss compared to the over 110,000 economists had anticipated, according to data from the Bureau of Labor Statistics. This slowdown in job growth was accompanied by a decrease in the unemployment rate to 4.2%, down from 4.3% a month prior, though economists attributed this decline to a shrinking labor force of 720,000.
Despite the weak headline number, the three-month average payroll gain stands at 111,000, a figure stronger than any three-month average recorded in 2025. However, the momentum is less convincing than a month ago, according to Sam Williamson, Senior Economist at First American.
Sector details showed pockets of strength, with professional and business services adding 36,000 jobs, social assistance adding 25,100, and health care adding 21,500. The construction sector added 11,000 jobs, driven by non-residential categories. Conversely, the leisure and hospitality sector lost 61,000 jobs, a surprise given the ongoing World Cup. The real estate and rental and leasing segment lost 1,200 jobs.
Economists believe the report may cause the Federal Reserve to reconsider a potential rate hike at its upcoming meeting. Mike Fratantoni, Chief Economist at the Mortgage Bankers Association, stated that the report shows a job market that is shakier than May's data indicated, and expects the Fed to keep rates unchanged through the remainder of the year, with the next move potentially being a hike in early 2027. Williamson noted that low jobless claims and steady wage growth do not strongly support near-term rate cuts.