US Hiring Cools in June as Payroll Growth Slows and Workforce Participation Declines

U.S. employers added 57,000 jobs in June, a slower pace than economists had anticipated. The latest employment report also included downward revisions to payroll figures for April and May, indicating that hiring has softened in recent months.

The unemployment rate edged down to 4.2% from 4.3% in May. However, the decline was linked to about 720,000 people leaving the labor force, pushing the labor force participation rate to 61.5%, its lowest level since March 2021.

Professional and business services recorded the strongest hiring gains, while social assistance and healthcare also added jobs. In contrast, the leisure and hospitality sector posted the largest decline in employment, including losses at restaurants, bars, hotels, and motels.

Average hourly earnings increased 3.5% compared with a year earlier. Financial markets reduced expectations of a near-term Federal Reserve interest rate increase following the report, although markets still expect the central bank to leave rates unchanged at its upcoming meeting.