The United States added far fewer jobs than expected in June, signaling a slowdown in labor market growth even as the unemployment rate unexpectedly declined, according to the latest figures from the Bureau of Labor Statistics.
The economy created 57,000 jobs during the month, well below economists’ expectations of around 110,000 and marking the weakest monthly payroll increase since February, when employment declined by 155,000 jobs. The June figures also represent the first significant shortfall in hiring since the conflict between the United States and Iran began.
Despite weaker job creation, the unemployment rate edged down to 4.2 percent from 4.3 percent in May, outperforming forecasts that had anticipated no change.
The slowdown was particularly evident in the hospitality sector, where analysts had expected hiring to receive a boost from the FIFA World Cup, which began on June 11 across 11 host cities in the United States. Instead, employment in food services and accommodation fell by 55,000 jobs during the month.
Shruti Mishra, a U.S. economist at Bank of America, said there had been little evidence so far that the tournament had translated into additional hiring.
While employment gains failed to materialize, consumer spending showed signs of increased activity. Bank of America’s credit card data indicated restaurant and bar spending in host cities rose by about 5 percent during the tournament, compared with an average increase of 3.8 percent across the rest of the country.
The report also showed a broader moderation in hiring across both the public and private sectors. Government employers added 8,000 jobs in June, down from 32,000 in May, while private employers created 49,000 positions compared with 97,000 the previous month.
Employment growth remained strongest in education, professional and business services, healthcare and social assistance. At the same time, revisions to previous data reduced combined payroll estimates for April and May by 74,000 jobs, with much of the downward adjustment concentrated in leisure and hospitality industries.
Wage growth remained relatively stable. Average hourly earnings increased 0.3 percent during June, while annual wage growth edged up to 3.5 percent from 3.4 percent.
Attention is now shifting to the Federal Reserve, where policymakers continue to balance slowing employment growth against inflation concerns. Federal Reserve Chairman Kevin Warsh has emphasized controlling inflation as the central bank’s primary objective, even as labor market conditions soften.
Following the employment report, financial markets reduced expectations that the Federal Reserve would raise interest rates twice later this year. Holger Schmieding, chief economist at Berenberg, said the weaker hiring data increased the likelihood that policymakers would leave borrowing costs unchanged at their next meeting.
Citigroup economists had already projected a softer employment report, pointing to rising unemployment claims, weaker hiring intentions among businesses and fewer job postings during June.
Financial markets reacted calmly to the data. The U.S. dollar weakened by about 0.6 percent against a basket of major currencies, while government bond prices remained largely unchanged.
Analysts said future policy decisions will depend on whether the recent slowdown in hiring continues or proves to be a temporary pause in an otherwise resilient labor market.
