[Stay on top of transportation news: Get TTNews in your inbox.]
U.S. hiring slows sharply in June
Payrolls rose 57,000 while the unemployment rate fell to 4.2%
Key Takeaways:
- Nonfarm payrolls increased 57,000 in June after downward revisions to the prior two months.
- The unemployment rate fell to 4.2% as labor force participation dropped to 61.5%.
- Leisure and hospitality led the hiring pullback, while healthcare and social assistance continued strong hiring.
U.S. hiring slowed sharply in June even as the unemployment rate fell, curbing some of the budding momentum in job growth this year.
Nonfarm payrolls increased 57,000 last month after downward revisions to the prior two months, according to Bureau of Labor Statistics data released July 2.
The unemployment rate fell to 4.2% as labor force participation dropped sharply.
The report suggests the labor market still faces challenges despite signs of strength in recent months. While consumer spending has been resilient in the face of the energy shock from the Iran war, Americans are pessimistic about high prices and wages that aren’t keeping up with inflation, which may also be keeping employers cautious about hiring.
The pullback in hiring was led by the biggest decline in leisure and hospitality payrolls since 2020. The retail trade and information sectors also shed jobs, while health care and social assistance continued strong hiring.
S&P 500 futures rose, while Treasury yields and the dollar fell. Investors also scaled back bets on a Federal Reserve interest rate increase this year.
The participation rate — the share of the population that is working or looking for work — dropped to 61.5%, the lowest level in more than five years, according to the July 2 report. The BLS said that when accounting for population adjustments, it was little changed from a year earlier.
Manufacturing and construction payrolls rose in June. Many economists have pointed to the data center buildout as a possible driver of demand for construction labor in 2026, even as homebuilding continues to be restrained by elevated interest rates.
At the same time, some Big Tech companies, such as Meta Platforms Inc. and Microsoft Corp., are reducing headcount, in part to offset heavy spending on artificial intelligence. Information payrolls continued to decline, marking the 17th drop in the last 18 months.
Employment in the financial activities sector, another key employer of white-collar workers seen as among the most vulnerable to automation, was little changed.
