US adds 57,000 jobs in June as hiring falls short of forecasts

US employers added 57,000 jobs in June, well below the 110,000 consensus estimate, as leisure and hospitality unexpectedly shed workers even during the World Cup tournament.

"One unexpectedly soft print doesn't undo the job gains seen over the last few months, but it serves as a reminder that monthly data can be volatile and subject to revision," Jim Baird, chief investment officer at Plante Moran Financial Advisors, said.

The unemployment rate ticked down to 4.2% from 4.3%, though the decline partly reflected a shrinking labor force. The share of Americans working or seeking work fell to 61.5%, the lowest in five years. Average hourly earnings rose 3.5% from a year ago, trailing the 4.2% annual inflation rate recorded in May. The Labor Department also revised down April's gain to 148,000 from 179,000 and May's to 129,000 from 172,000, meaning employment for those two months was 74,000 lower than previously reported.

The softer-than-expected report reduces pressure on the Federal Reserve to raise rates at its July 30-31 meeting, with most forecasters now expecting the central bank to hold the federal funds rate at 3.5% to 3.75%. Fed Chair Kevin Warsh reiterated this week he would push inflation back to the 2% target but declined to comment on the July decision. About 18% of traders still price a quarter-point hike this month, down from higher odds before the data.

Small Business Hiring Shows Signs of Life

The National Federation of Independent Business's Small Business Employment Index edged down to 100.2 in June from 100.3, remaining just above the historical average of 100. The survey showed 32% of small business owners reported unfilled job openings, up 3 percentage points from May's lowest level since May 2020. A net 11% of owners plan to create new jobs in the next three months, matching the historical average and up 2 points from May.

More owners were actively trying to hire: 62% reported hiring or attempting to hire in June, up 7 points from May. Labor quality was cited as the single most important problem by 19% of owners, up 6 points, while only 8% cited labor costs, down 6 points from May's historic high. A net 28% reported raising compensation, the lowest reading this year, suggesting wage pressures may be easing for smaller firms.

The jobs data and small business survey together paint a picture of a labor market that is cooling but not collapsing. Nonfarm payrolls have averaged 92,000 per month in the first half of 2026, above the roughly 70,000 breakeven rate estimated by the Atlanta Fed but well below the 200,000-plus pace of 2023 and early 2024. The "low-hire, low-fire" dynamic persists: layoffs remain contained, but the unemployed are finding it harder to secure new positions.

Leisure and hospitality shed 61,000 jobs in June, the worst-performing sector, reflecting weaker-than-usual seasonal hiring. Professional and business services added 36,000 jobs, while social assistance added 25,000 and health care added 22,000 — below its average monthly gain of 38,000 over the past year. Construction added 11,000 jobs and manufacturing added 3,000, while retail trade cut 7,500 positions.

The next major data point for the Fed will be the Consumer Price Index report due July 14, which will show whether inflation continued to run above the central bank's 2% target in June.

This article is for informational purposes only and does not constitute investment advice.