WASHINGTON / NEW YORK, July 2 — Hiring in the world’s largest economy slowed sharply in June, according to data released on July 2 by the U.S. Bureau of Labor Statistics. Employers added only 57,000 nonfarm jobs during the month, roughly half of the 113,000 to 115,000 gain that economists surveyed by major outlets had expected. The unemployment rate ticked down to 4.2 percent from 4.3 percent in May, its lowest reading in about a year, though the improvement reflected shrinking labor supply rather than stronger demand for workers.
The report also revised earlier months lower. April’s gain was cut to 148,000 from an initial 179,000, and May’s was reduced to 129,000 from 172,000, a combined downward revision of 74,000 jobs. The three-month average for payroll growth now stands at about 111,000, a step down from the pace reported earlier in the spring and consistent with what several economists described as a labor market that has cooled but has not collapsed.
Sector data pointed to an unusual mix of strength and weakness. Professional and business services added 36,000 positions, social assistance added 25,000 and health care added 22,000, extending a pattern in which services tied to demographic and structural demand continue to absorb workers. Leisure and hospitality, by contrast, shed 61,000 jobs, a swing that officials and analysts linked to weaker-than-usual seasonal hiring and the fading effect of earlier boosts from events including the 2026 FIFA World Cup being co-hosted by the United States, Canada and Mexico. Mining, information, retail, finance and manufacturing showed little net change.
Wage growth held steady. Average hourly earnings for private-sector workers rose 0.3 percent from May to $37.64, up 3.5 percent from a year earlier. The average workweek was unchanged at 34.3 hours. But the labor-force participation rate slipped 0.3 percentage point to 61.5 percent, its lowest reading in about five decades outside the pandemic period. The number of people classed as long-term unemployed, meaning they had been out of work for 27 weeks or more, was about 1.9 million, roughly 286,000 higher than a year earlier.
Markets rewrote their near-term interest-rate expectations after the release. Fed funds futures tracked by CME Group’s FedWatch tool showed the implied probability of a rate cut at the Federal Reserve’s July meeting falling to about 17.6 percent, down more than 11 percentage points from a day earlier, while the odds of an unchanged decision rose to about 82 percent. Two-year Treasury yields declined, the dollar index dropped to a two-week low near 100.6, and spot gold rose about 2.1 percent to around $4,113 an ounce. Crude oil steadied, with WTI ending at $68.69 a barrel and Brent at $71.80.
Equity indexes diverged. The Dow Jones Industrial Average climbed 594.83 points, or 1.14 percent, to a record close of 52,900.07, aided by rate-sensitive sectors. The S&P 500 finished essentially flat, edging up just under one point to 7,483.24, while the tech-heavy Nasdaq Composite fell 0.8 percent to 25,832.67 as chip stocks came under renewed pressure for a second consecutive session. The Philadelphia Semiconductor Index dropped about 5.4 percent; Teradyne and KLA led declines with falls of roughly 13.6 percent and 11.5 percent, while ASML lost about 4 percent, Applied Materials fell more than 7 percent, Micron dropped about 5.5 percent and Nvidia slipped 1.4 percent. Because Independence Day falls on a Saturday this year, U.S. financial markets are closed on Friday, giving investors a long weekend to digest the report.
Reaction from the Federal Reserve and market economists was mixed. Officials, including new Chair Kevin Warsh, have repeatedly stressed that inflation remains too far above the central bank’s 2 percent target for policy to be loosened aggressively, and some analysts noted that headline job growth of 57,000 is still enough to hold unemployment steady given a shrinking labor force. Others pointed to the downward revisions, the drop in participation and rising long-term unemployment as evidence of a market that is losing momentum. The consumer price index for June, scheduled for release on 14 July, is now widely expected to become the more important test of the Fed’s next move, with investors watching for whether cooling energy prices are enough to offset persistent services inflation.
