The U.S. economy saw job creation cool sharply heading into the summer, the Bureau of Labor Statistics reported Thursday. Non-farm payroll for June increased by a seasonally adjusted 57,000 for the month, slower than the downwardly revised 129,000 added in May and worse than the 115,000 Dow Jones consensus forecast.
The US non-farm payroll added +57K jobs in Jun-26, well below a downwardly revised +129K in May-26 and market forecasts of +110K. It was the lowest job gain in four months, following three consecutive months of stronger-than-expected gains. However, it was roughly in line with the average monthly change over the prior 12 months (+36K). In June, employment continued to trend up in professional and business services (+36K), social assistance (+25K), and health care (+22K). Employment in leisure and hospitality declined by -61K, reflecting weaker than usual seasonal hiring, and likely an effect of the World Cup 2026.
Despite slower job growth, the US unemployment rate dropped to 4.2% in Jun-26, down from 4.3% in May-26 and below expectations, as many people left the workforce. The number of unemployed fell by -213K to 7.09m, while total employment declined by -507K to 162.26m. The labour force contracted by -720K to 169.36m, as a result participation rate fell to 61.5%, the lowest since Mar-21. The employment rate also dipped to an over four-year low of 59.0%.
In another release, claims for unemployment benefits fell to 5-weej low of 215K for the week ending 27th June (previous week: 216K), and below market expectations of 220K. Meanwhile, continuing claims, which are seen as a gauge of outstanding unemployment in the US, rose by +2K to 1.814m in the third week of June, the highest in three months.
June’s moderate job growth remains sufficient to stabilise the unemployment rate, while average hourly earnings show steady, non-accelerating momentum. Despite softer job growth, MBSB believes there is no immediate pressure on the US Fed and new Chair Warsh to adjust monetary policy immediately, especially in the upcoming Jul-26 meeting. However, market expectations still price in a possibility for rate hike in Sep-26.
