US hiring slows sharply in June

Hiring decelerates in June

U.S. job growth weakened notably in June 2026, with nonfarm payrolls increasing by 57,000. The June figure came in well below the commonly cited consensus forecast of 115,000 and marked a slowdown from May’s pace. The softer reading signals a cooling in labor demand after stronger prints earlier in the year.

The latest report also reshaped the picture for prior months. Payroll gains for April were revised down by 31,000 to 148,000, while May’s total was cut by 43,000 to 129,000. Combined, these revisions subtracted 74,000 jobs from previously reported employment growth, reinforcing the view that momentum had already been easing before June.

Unemployment rate dips as workers exit labor force

Despite the slower hiring, the unemployment rate edged lower in June, slipping to 4.2% from 4.3% in May. The number of unemployed people fell to about 7.1 million from roughly 7.3 million. However, the change in unemployment figures occurred alongside a sizeable contraction in participation.

Reports show that more than 700,000 people left the labor force in June, including an estimate of about 720,000 from one source. This pullback helps explain how the unemployment rate could decline even as job creation weakened. The combination of modest payroll gains and reduced participation points to a labor market that is cooling rather than expanding broadly.

Sector shifts: leisure jobs fall, services add workers

The sector breakdown of June employment showed divergent trends. Leisure and hospitality recorded a decline of 61,000 jobs, signaling a retreat in hiring at accommodation and food services businesses. This drop stood out as one of the more pronounced sector-level changes in the report.

By contrast, professional and business services added 36,000 jobs in June, providing one of the few areas of solid growth. The mixed pattern across industries suggests that weakness is concentrated in some consumer-facing sectors, while higher-skilled service categories continue to expand.

Wage growth remains steady but moderate

Average hourly earnings continued to rise in June, though at a measured pace. Wages increased 0.3% compared with May and were 3.5% higher than a year earlier. This rate of pay growth indicates that workers are still seeing income gains, but not at an accelerating clip.

The combination of moderate wage growth, slower hiring, and a lower unemployment rate driven partly by labor force exits paints a picture of a labor market losing some steam. Employers appear more cautious in adding staff, even as pay continues to inch higher and participation recedes.