U.S. Adds 57,000 Jobs in June While Unemployment Rate Falls to 4.2%

The U.S. economy added 57,000 nonfarm payroll jobs in June, below the 115,000 consensus forecast and slower than the downwardly revised 129,000 added in May, the Bureau of Labor Statistics reported Thursday. The unemployment rate fell to 4.2 percent from 4.3 percent in May.

The decline occurred as the labor force participation rate dropped 0.3 percentage points to 61.5 percent, the lowest reading since March 2021. Household employment fell by 507,000. A broader measure of unemployment that includes discouraged workers and those in part-time roles for economic reasons declined 0.2 percentage points to 7.9 percent.

April payrolls were revised down by 31,000 to 148,000. Average hourly earnings rose 0.3 percent for the month and 3.5 percent from a year earlier. Professional and business services added 36,000 jobs, social assistance added 25,000, and healthcare employment rose by 22,000.

Leisure and hospitality lost 61,000 positions. Initial jobless claims totaled 215,000 for the week ended June 27, down 1,000 from the prior week and below the 220,000 forecast. Stock market futures rose after the report as traders reduced expectations for a Federal Reserve rate increase as soon as September.

The two-year Treasury yield fell 3.5 basis points to 4.13 percent. "The slowdown in payroll growth challenges the narrative of renewed labor market strength that has been building in recent months but, reinforces the view that the Federal Reserve is under little pressure to tighten policy," said Seema Shah, chief global strategist at Principal Asset Management.

"For the Fed, this number is fine," Thomas Simons, senior economist at Jefferies, said in a note.

Fed Chairman Kevin Warsh described the jobs picture as "steady" in an appearance Wednesday while stressing the need to return inflation to the central bank's 2 percent target.