US job growth slowed much more than expected in June, with Non-Farm Payrolls rising just 57k, well below the consensus forecast of 114k. The previous month’s gain was also revised sharply lower to 129k from the initially reported 172k, reinforcing signs that labor market momentum has cooled heading into the second half of the year.
Despite the weak headline, the unemployment rate unexpectedly edged down to 4.2% from 4.3%. However, the improvement was largely explained by a decline in labor force participation, which fell 0.3 percentage points to 61.5%, suggesting fewer people were actively seeking work rather than stronger hiring. Meanwhile, average hourly earnings rose 0.3% mom for a second consecutive month, lifting annual wage growth to 3.5% yoy from 3.4% yoy and indicating that wage pressures remain resilient despite softer employment gains.
The report presents a mixed picture for the Federal Reserve. Hiring has clearly lost momentum, but persistent wage growth and a lower unemployment rate do not point to a labor market that is deteriorating rapidly. Markets are therefore likely to view the data as reducing the urgency for another rate hike without completely eliminating the possibility. Attention will now turn to whether subsequent labor market and inflation data confirm that the recent slowdown reflects a broader moderation in economic activity rather than a temporary soft patch.
| Indicator | Previous | Latest | Consensus |
|---|---|---|---|
| Non-Farm Payrolls | 129k | 57k | 114k |
| Average Monthly Job Growth (Past 12 Months) |
— | 36k | — |
| Unemployment Rate | 4.3% | 4.2% | 4.3% |
| Labor Force Participation Rate | 61.8% | 61.5% | — |
| Average Hourly Earnings (MoM) | 0.3% | 0.3% | 0.3% |
| Average Hourly Earnings (YoY) | 3.4% | 3.5% | 3.5% |
