June hiring slows as labor market loses steam

The labor market lost momentum in June as employers added just 57,000 jobs, the weakest monthly gain in several months, according to the Bureau of Labor Statistics.

The figure fell well below economists’ expectations of 115,000 and followed a downwardly revised 129,000 jobs added in May.

Despite weaker hiring, the unemployment rate declined to 4.2% from 4.3%. However, the drop reflected fewer people participating in the workforce rather than stronger employment. The labor force participation rate fell to 61.5%, its lowest level since March 2021, while household employment dropped by 507,000.

Revisions paint a softer picture
The government also revised previous job reports lower, cutting May payrolls by 43,000 and April’s by 31,000, suggesting the labor market has been weaker than earlier estimates.

Average hourly earnings increased 0.3% in June and 3.5% from a year earlier, showing wage growth remained steady. Professional and business services added 36,000 jobs, while social assistance and healthcare also posted gains. 

In contrast, the leisure and hospitality sector lost 61,000 jobs because of slower seasonal hiring. Retailers also shed 7,500 jobs as consumers reduced discretionary spending. 

Markets scale back rate hike bets
Financial markets welcomed the report, sending Treasury yields lower as investors scaled back expectations of a September Federal Reserve rate hike.

Economists said slower hiring reduces pressure on the Federal Reserve to raise interest rates, although policymakers remain focused on bringing inflation back to the central bank’s 2% target.