U.S. job growth in June slowed significantly, with employers adding just 57,000 positions, falling well below economists’ expectations of 110,000, according to Labor Department data released on July 2. The report also revised downward payroll gains for April and May by a combined 74,000 jobs, signaling a softer labor market than previously reported.

Despite the weaker monthly job additions, the unemployment rate edged down slightly to 4.2% in June after remaining steady at 4.3% for three months. Analysts noted this decline partly reflects fewer job separations, including quits and layoffs. Kory Kantenga, LinkedIn’s head of economics for the Americas, suggested the labor market still shows resilience despite the slowdown.

Differences in survey methodologies and demographic shifts contributed to the stability in the unemployment rate, said Nicole Bachaud, an economist at ZipRecruiter. These include reduced immigration flows, increased retirements, and some long-term unemployed workers becoming disengaged from the labor market. The number of long-term unemployed—those without work for 27 weeks or more—remained near 1.9 million in June, up by 286,000 compared to the previous year.

Wage growth continued steadily, with average hourly earnings rising 0.3% in June, matching the increase in May, and up 3.5% over the past year. This modest wage growth provides some relief to workers grappling with inflation, though Consumer Price Index data due July 14 will offer further insight into inflation trends.

Sector-specific hiring data showed mixed results. The professional and business services sector led gains with 36,000 new jobs, followed by social assistance adding 25,000 positions, and health care contributing 22,000 jobs, though this represented a slowdown from its average monthly increase of 38,000 over the past year. Conversely, leisure and hospitality employment declined by 61,000 jobs, a drop attributed to weaker-than-expected seasonal hiring. This figure surprised some analysts given the U.S. cohosting of the World Cup, which was anticipated to boost jobs in the sector. Some experts expect revisions to show stronger hiring in coming months, while others suggest the May surge may have simply shifted hiring forward.

Other industries such as construction, manufacturing, and financial activities reported little to no change in employment for the month.

Job openings remained elevated, increasing slightly to 7.594 million in May from a revised 7.585 million in April. Bill Adams, chief U.S. economist at Fifth Third Commercial Bank, noted the gradual improvement in labor demand, particularly among small businesses, which experienced four consecutive months of job growth in June—the longest streak since 2020.

Despite these indicators, overall sentiment regarding the job market was more pessimistic than in recent months. Challenger, Gray & Christmas reported that announced hiring plans dropped 44% in June from May but remained significantly higher than a year earlier. Meanwhile, layoff announcements declined 53% from May and were slightly below June 2025 levels. Although cutbacks have decreased compared to last year, total job cuts for the first half of 2026 rank as the second highest since 2020.

The Labor Department’s report is closely watched by the Federal Reserve as it weighs monetary policy decisions aimed at controlling inflation without hindering economic growth. While inflation readings ahead of the Fed’s June meeting had fueled expectations of interest rate increases, the subdued job report has led some analysts to anticipate that officials may hold rates steady at their July meeting. As of early July, the consensus forecast calls for the federal funds rate to remain in the current 3.5% to 3.75% range, though nearly one-fifth of economists still foresee a quarter-point hike.