U.S. Nonfarm Payrolls Rose 57,000 in June, Below Expectations

U.S. nonfarm payrolls expanded by 57,000 in June, a figure that came in below the market's anticipated gain of 113,000. When factoring in significant downward revisions totaling 74,000 for April and May, the overall employment picture for the month shows a net decline of 17,000 jobs. This marks a shift after a period of stronger-than-expected reports, suggesting a cooling in the labor market.

Private sector payrolls saw an increase of 49,000 in June, though prior months' figures were also revised down by 50,000. Key sectors driving job growth included healthcare and social assistance, which added 47,000 positions, and professional and business services, contributing 36,000 new jobs. Manufacturing saw a modest gain of 3,000, while government employment increased by 8,000. Despite the June deceleration, the first half of 2026 demonstrated a stronger trend, with average monthly job additions of 92,000 compared to just 10,000 per month in 2025.

The unemployment rate unexpectedly declined to 4.2% in June. This decrease, however, was accompanied by a substantial reduction in the labor force, which outpaced a 507,000 decline in civilian employment—an alternative measure that includes small business startups. This civilian employment gauge has shown weaker performance than nonfarm payrolls in 2026, contrasting with its stronger showing in 2025.

Average hourly earnings, a measure of cash earnings excluding irregular bonuses and fringe benefits, increased by 0.3% in June, pushing the year-over-year growth to 3.5%. Aggregate hours worked saw a modest rise of 0.1% for the month and are up 0.9% annually. In other labor market data, initial jobless claims fell by 1,000 last week to a still-low 215,000, while continuing claims edged up by 2,000 to 1.814 million.

Looking ahead, despite the softer June report, continued job gains are anticipated in the coming months. The labor market's underlying strength, as evidenced by the sustained growth trend earlier in the year and low jobless claims, suggests resilience, though the pace may moderate.

Key terms:

1. Nonfarm payrolls: A widely watched economic indicator representing the total number of paid U.S. workers, excluding government employees, farm employees, and private household employees.

2. Unemployment rate: The percentage of the total labor force that is unemployed but actively seeking employment and willing to work.

3. Average hourly earnings: A measure of the average amount of money earned per hour by employees, excluding irregular bonuses/commissions and fringe benefits, providing insight into wage inflation.