U.S. jobs growth slows sharply in June as unemployment rate holds at 4.2%

U.S. employers added 57,000 jobs in June, well below the 115,000 economists expected, while the unemployment rate held at 4.2% and the labor-force participation rate slipped to 61.5%, its lowest level since March 2021. The slowdown was not evenly spread across the economy: professional and business services added 36,000 jobs, social assistance added 25,000 and health care added 22,000, but leisure and hospitality lost 61,000 jobs as seasonal hiring slowed.

The household survey showed a weaker underlying picture than the headline unemployment rate suggested. The civilian labor force fell by 720,000 in June, employment dropped by 507,000 and the number of unemployed people fell by 213,000 to 7.1 million, even as the jobless rate stayed at 4.2%. The employment-population ratio edged down to 59.0%.

June also looked softer once prior months were revised. April payrolls were cut by 31,000 to 148,000, and May was revised down by 43,000 to 144,000, trimming a combined 74,000 jobs from the spring picture. That left June as a marked step down from a labor market that had appeared sturdier only weeks earlier.

U.S. stock futures rose and Treasury yields eased after the release, while traders scaled back expectations of a near-term hike.