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

U.S. nonfarm payrolls expanded by 57,000 in June, a figure that came in below the consensus expectation of a 113,000 gain. This report indicates a deceleration in the pace of job creation. Furthermore, payroll gains for April and May were revised downward by a combined 74,000, resulting in a net decline of 17,000 jobs, including these revisions. Despite this recent slowdown, the U.S. employment landscape demonstrated considerable strengthening throughout the first half of 2026, with an average monthly increase of 92,000 jobs, a significant acceleration compared to the average of 10,000 jobs per month observed in 2025.

Private sector payrolls advanced by 49,000 in June, though prior months also saw downward revisions totaling 50,000. Key sectors contributing to job growth in June included healthcare & social assistance, which added 47,000 positions, and professional & business services, which increased by 36,000. Manufacturing saw a modest gain of 3,000 jobs, while government employment rose by 8,000. Notably, payrolls excluding government and the often policy-driven healthcare & education sectors experienced a decline of 20,000 in June. Federal government payrolls, specifically, increased by 2,000 in June but have seen a substantial reduction of 323,000 since the beginning of the Trump Administration, marking the steepest decline since the post-World War II demobilization, excluding decennial Census effects.

The unemployment rate unexpectedly decreased to 4.2% in June. This decline, however, was attributed to a substantial reduction in the labor force, which outpaced a 507,000 decline in civilian employment. Civilian employment is an alternative measure of jobs that encompasses small-business formations. This measure has been considerably weaker than nonfarm payrolls in 2026, a reversal from its stronger performance in 2025. Average hourly earnings, which exclude irregular bonuses, commissions, and fringe benefits, increased by 0.3% in June, pushing the year-over-year growth to 3.5%. Aggregate hours worked saw a 0.1% increase in June and are up 0.9% over the past year. Given recent inflation trends, these wage gains may struggle to keep pace with rising prices.

Looking ahead, despite the softer June report, continued job gains are anticipated in the coming months. Other recent data points align with a generally robust labor market, with initial jobless claims falling by 1,000 last week to a still low 215,000. Continuing claims, however, experienced a slight increase of 2,000, reaching 1.814 million.

Key terms:

1. Nonfarm Payrolls: A measure of the total number of paid employees in the U.S., excluding farm workers, government employees, private household employees, and non-profit organization 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: The average amount of money earned per hour by employees, a key indicator of wage inflation and consumer purchasing power.