U.S. Hiring Continues at a Steady but Slower Pace
Employers added fewer jobs in June than a month earlier but the unemployment rate ticked down, a decent showing for the U.S. economy. Note: Data is seasonally adjusted. The average is calculated as a three-month moving average. Source: Bureau of Labor Statistics. By The New York Times Talmon Joseph Smith Employment figures for June showed the American economy continues to stride past obstacles including the inflationary pressures of the war with Iran. Employers added 57,000 jobs last month and the unemployment rate fell to 4.2 percent from 4.3 percent the previous month. In recent years, economists have remarked with surprise at the resilience of the American economy. At the midpoint of 2026, with the volatility caused by President Trump’s tariff hikes mostly baked in and the war with Iran potentially winding down, economic durability may be the emerging norm. Average hourly earnings growth for workers registered 3.5 percent on an annual basis, a marked slowdown from the peak a few years ago. And pay raises are not keeping up with prices, a major reason consumer sentiment remains so low. Inflation is now hovering around 4 percent after dropping near 2 percent in 2024. In positive news, employment in professional and business services, which fell overall from 2024 to 2025, has trended up since the start of 2026, and the sector added 36,000 jobs in June. Jobs in social assistance and health care have continued their steady gains. Despite a bump in activity from the World Cup, leisure and hospitality employment declined by 61,000 in June. Labor economists have mentioned, though, that this summer’s numbers may be a noisy reflection of seasonal adjustments in the data. This was the fourth consecutive monthly increase in jobs, an impressive turnaround from the jobs slowdown that occurred throughout 2025. The Bureau of Labor Statistics found that U.S. employers added only 181,000 jobs last year, far fewer than the 1.5 million jobs that were added in 2024. Jason Draho, an economist and the head of asset allocation for the Americas at UBS, called the report “not bad.” He noted that the addition of 57,000 jobs “is right around what most economists assume is the trend level of job growth.” Gregory Daco, the chief economist at EY, a consulting firm, said he anticipates job growth will stabilize at approximately 70,000 per month for the rest of the year, and the unemployment rate may edge up, but only slightly. The unemployment rate has been at or below 4.5 percent since October 2021, the longest streak of low unemployment since the long expansion in the late 1960s. Still, an unusually low number of people are quitting their jobs; surveys show workers are staying put because they lack confidence in finding better opportunities. The S&P 500 rose 0.5 percent as trading got underway in New York. The rise suggests investors see less likelihood of immediate rate increases, given the signs of weakness in the jobs numbers. Another piece of evidence for a steady U.S. economy comes from car sales data. Cox Automotive, a research firm, estimates passenger vehicle sales were down 0.5 percent in the first six months of the year compared to a year earlier and up 4.2 percent in June from June 2025. Data from carmakers like Toyota, Honda and Hyundai shows that sales of hybrid vehicles have been surging recently as people seek to use less fuel, which has become much more expensive because of the war in Iran. Kush Desai, a White House spokesman, said the jobs report “reinforces that the American labor market remains solid thanks to President Trump’s economic agenda.” In his post on social media, he called particular attention to the slight uptick in manufacturing jobs last month. The big decline in the prime-age employment rate is really perplexing. The rate fell 0.6 percentage points, the biggest one-month drop since 2009, outside the pandemic plunge. The number comes from the survey of households, which is more volatile than the business survey, and it’s possible (even likely) that the figure was a fluke and will reverse next month. But it’s a very odd reading, especially after a period of remarkable stability in the measure. The slight damper this number puts on job growth this year also eases a conundrum that had puzzled economists, if not resolving it completely: How could employment be growing so quickly when the labor force is basically stagnant? The economy has been adding very few workers, partly as a consequence of immigration restrictions imposed over the past year and a half. Shortages could arise in the coming months, however, if employers continue to want to hire and there are fewer people available to work — especially as hundreds of thousands of migrants with Temporary Protected Status lose their ability to work legally. A broader measure of unemployment, which includes people who are “marginally attached” to the job market or who are working fewer hours than they would like, also dropped in May, to 7.9 percent. That might otherwise be seen as a good sign. But this time it seems more likely that people have stopped looking for work. That follows a rise in the number of people who have been unemployed for more than 27 weeks, which is up 286,000 over the year — a consequence of the low hire, low fire labor market in 2025. That local government surge that appeared to push up the headline number in May was partially revised away, and the sector was flat this month. The federal government appears to have stopped shrinking after the Trump administration cut 325,000 jobs in 2025. The number of employees has been steady through 2026 so far. The weak spot in the report is from the household survey, which is separate from the survey of businesses that is the source for the monthly payroll figures. The unemployment rate fell, but as we noted, that wasn’t as encouraging as it might seem at first. Employment fell among people in their prime working years, and the labor force shrank. These kinds of divergences between the two sources are always confusing, but they aren’t unusual. The surveys cover different populations and measure somewhat different concepts. But over time, the two sources typically converge. One indicator worth watching as a sign of inflection points in the labor market is temporary help services. The sector had been shedding workers steadily since early 2022, when employers were desperate to find people. Around the end of last year, after a streak of extremely weak hiring, the sector started growing again. It added 9,000 jobs last month, potentially due to an uptick in activity in manufacturing, where surveys have been brightening even though hiring has yet to pick up substantially. The big question in the labor market over the past few months has been whether the pickup in job growth was real, or a mirage that would quickly reverse (or get revised away). On the surface, today’s number is a bit disappointing, falling short of forecasters’ expectations for a fourth-straight month of six-figure growth. But while it might tempter a bit of the excitement, the report is still basically consistent with the idea that the labor market has firmed after last year’s wobbles. A gain of 57,000 jobs isn’t spectacular, but it’s decent in an environment of slow labor force growth. The revisions were negative, but still left recent the three-month average above 100,000 jobs, and wage gains were solid. This certainly isn’t the booming labor market of a few years ago, but it continues to look solid. Although there has been a lot of consternation about the effects of A.I. on employment, the June figures continue to show that the technology is not yet leading to widespread job losses. The information sector, which includes tech companies, lost 9,000 jobs, but some of the other areas most exposed to A.I.-fueled job losses did not experience any slowdown. Professional and businesses services added 36,000 jobs and employment in financial services was also stable. What’s behind that fall in the unemployment rate? The household survey, which can be volatile, showed that the labor force shrunk by 720,000 people. That was mostly among prime aged workers -- thoes between 25 and 54 years old. In that group, the share of people working or looking for worked dropped to 83.3 percent from 83.9 percent. Overall, it looks as though labor force participation has plateaued, after reaching multi-decade highs over the past few years. After revisions, the manufacturing sector lost 2,000 jobs in May, but it has added 18,000 jobs this year. That is still a glacial pace of growth but it is a reversal from the steep declines in the previous years. The dollar, which is sensitive to changes in interest rate expectations, fell sharply as the numbers were released, extending a modest decline for the day to about 0.5 percent against a basket of other major currencies. The dollar has been strengthening in recent months as expectations for interest rate cuts shifted to forecasts for a potential increase in rates. Today’s numbers are tempering some of that move. Higher rates tend to draw investment from around the world into the U.S., strengthening the dollar. This is probably a decent enough jobs report in the eyes of the White House, which has not yet commented on the figures. The unemployment rate has changed little, and certain favored industries, like manufacturing, are stable or posting some gains. At a moment when inflation is uncomfortable amid the war with Iran, the hiring report gives the administration something it can try to sell to voters, who are growing ever angrier about the state of the economy. Health care, which had been holding up the labor market for the past few years, may be losing steam. It added 22,000 jobs. lower than the 38,000 jobs per month pace over the previous year. Manufacturing continues to look like it’s stabilizing after shedding jobs in 2024 and 2025. The sector added 3,000 jobs in June. With today’s numbers, the U.S. has added an average of 111,000 jobs per month over the past three months. That’s down a bit from last month, but is still a significant pickup from the end of last year, when employment was falling. The market reaction to the new numbers is fairly mild so far. While hiring slowed, the unemployment rate still fell, which is likely to keep the Fed on its current course. Stocks have moved higher and government bond yields — which are the market’s interest rates — have fallen slightly, as this data is likely to bolster the case for keeping interest rates unchanged or even lowering them, rather than intensifying the pressure to raise rates. Officials at the Fed broadly contend that the labor market is not a source of inflationary pressures. Instead, they point to the energy shock caused by the war in Iran and the buildout of infrastructure stemming from the boom in artificial intelligence as new catalysts. In June, average hourly earnings rose by 0.3 percent for the month, or 3.5 percent compared to the same time last year. The unemployment rate had held steady at 4.3 percent for three months before this report, which was a bit perplexing to many economists given the strong rate of job growth. So the dip today isn’t too surprising, despite the somewhat weaker job gains. The big surprise here: Employment in leisure and hospitality declined by 61,000 jobs, after jumping in May. Analysts have suggested that the World Cup could be boosting hiring in food services and hotels, so this monthly move might be a weird statistical quirk. Arts
