US Hiring Slows Sharply in June With Only 57,000 Jobs Added

US employers added just 57,000 jobs in June, less than half the previous month’s total and a sign that businesses remain cautious about the economy’s near-term direction, the Labor Department reported Thursday.

Unemployment Ticks Down, but for the Wrong Reasons

The unemployment rate edged down to 4.2% from 4.3% in May, but the decline was driven largely by workers leaving the labor force rather than finding new jobs. People who stopped looking for work are no longer counted as unemployed, masking what remains a difficult environment for job seekers.

The figures point to a labor market stuck in what economists describe as a “low-hire, low-fire” pattern — one where employed workers enjoy relatively stable jobs as layoffs remain low, but those out of work are struggling to get hired. Strong job gains earlier in the spring had raised hopes the economy was breaking out of that dynamic, but Thursday’s report suggests the momentum has not held. Earlier figures were also revised downward, with April’s count falling from 179,000 to 148,000 and May’s dropping from 172,000 to 129,000.

“We are in a market that is still very fragile, and still susceptible to shocks happening,” said Nicole Bachaud, labor economist at ZipRecruiter. “There is still a lot of hesitation on the part of employers and workers themselves to make any moves.” She noted that separate government data shows companies are posting more job openings without filling them.

Restaurants and Retail Cut Jobs Despite World Cup

The hospitality sector delivered one of the month’s biggest disappointments. Restaurants, bars, and hotels cut 61,000 jobs in June — a sharp reversal for an industry that many had expected would benefit from the World Cup tournament taking place across multiple US cities. Retailers shed an additional 7,500 positions.

Chad Moutray, chief economist at the National Restaurant Association, said member businesses are seeing consumers pull back on dining out, particularly below higher income brackets. “We continue to hear that a lot of Americans are struggling to make ends meet,” he said. “If you’re catering to the upper end of the K, you’re doing fine. If you’re catering to the lower part of the K, you’re seeing some challenges.”

Higher food costs and minimum wage increases have further constrained hiring capacity. “Costs continue to rise, and one way to control that is to pull back on staffing,” said Denise Beckson, a vice president at Morey’s Piers and Beachfront Water Parks in Wildwood, New Jersey, whose company hired roughly the same number of seasonal workers as last year.

Construction and Professional Services Add Jobs

Blue-collar industries posted modest gains. Construction firms added 11,000 positions and manufacturers added 3,000. Some of the construction hiring is being driven by AI infrastructure buildout — firms building out electrical grid capacity to support the surge in data center development.

Thomas Murphy, vice president of Power & Construction Group in Scottsville, New York, said his company added 47 workers over the past two months and is looking to hire 15 to 20 more electricians, laborers, and heavy equipment operators. “The grid can’t handle all the new power that everybody’s using,” he said. “We need to continuously build the grid. But it does take time.”

Professional and business services — a sector including architecture, engineering, and software development — added 36,000 jobs, suggesting that AI adoption has not yet produced the anticipated job losses in those fields and may in fact be supporting employment for now.

Report May Give Federal Reserve Cover to Hold Rates

Thursday’s US hiring slowdown data could relieve pressure on the Federal Reserve to raise interest rates at its next policy meeting later this month. Previously, many investors had anticipated a rate hike as hiring appeared to be accelerating. The prospect of rates holding steady lifted stocks, with the S&P 500 up 0.7% in mid-morning trading.

“Today’s data hit the sweet spot for markets — strong enough to keep worries about growth at bay, but soft enough to reduce the probability of a rate hike,” said Eric Winograd, chief US economist at AB Global.

Fed Chair Kevin Warsh, speaking in Portugal Wednesday, reiterated his commitment to bringing inflation back to the Fed’s 2% target but declined to say whether the central bank would act at the upcoming July meeting. Average hourly wages rose 3.5% from a year earlier — a solid gain, but one that continues to trail inflation and leave many workers struggling with rising costs for food, gas, and housing.

Workforce Participation Hits Five-Year Low

The share of Americans either working or actively looking for work fell to 61.5% in June, down from 61.8% in May — the lowest labor force participation rate in five years. Much of the decline reflects the ongoing retirement of the baby boom generation, with more than 10,000 Americans turning 65 every day. However, the participation rate among prime working-age adults between 25 and 54 also declined last month, pointing to broader disengagement beyond demographics alone.

Historically, a monthly gain of 57,000 jobs would be considered weak. But with immigration sharply reduced and the workforce shrinking, even gains at that level are currently sufficient to hold the unemployment rate roughly steady over time.