U.S. hiring growth slows sharply in June

U.S. job growth stumbled in June, with nonfarm payrolls rising by just 57,000, the weakest gain since the pandemic-era recovery began. The Bureau of Labor Statistics report, released July 2, also revised downward the payroll increases for April and May, underscoring a broader cooling trend in the labor market. The unemployment rate fell to 4.2%, but the drop came as labor force participation slumped to 61.5%, the lowest level in more than five years. The participation rate’s decline suggests fewer Americans are actively seeking work, which may reflect growing pessimism over wages failing to keep pace with inflation and persistent high prices. The sharpest pullback occurred in leisure and hospitality, which saw the largest drop in payrolls since 2020, while retail trade and information sectors also shed jobs. In contrast, healthcare and social assistance continued to expand, adding workers at a steady clip. Manufacturing and construction payrolls grew, with economists pointing to data center construction as a potential driver of demand for construction labor in 2026. Meanwhile, the information sector, home to many white-collar roles vulnerable to automation, has now cut jobs in 17 of the last 18 months. The financial activities sector, another key employer of automation-prone jobs, showed little change. Financial markets reacted swiftly: S&P 500 futures rose, while Treasury yields and the U.S. dollar fell as investors dialed back expectations for a Federal Reserve interest rate hike later this year. The report highlights a labor market caught between resilience in consumer spending and growing caution among employers, with high prices and wage stagnation weighing on hiring decisions.