United States: Hiring Slowed in June

After three months of stronger-than-expected growth, the labour market came back down to earth in June. While not truly disappointing, the 57,000 net hires still fell short of consensus expectations. Moreover, the strength of the previous reports was somewhat diminished by downward revisions of 43,000 for May and 31,000 for April. That said, conditions remain less weak than they were previously. Average job growth over the last three months stands at 111,000, compared with 73,000 over the preceding three-month period and -39,000 during the final three months of 2025. It will now be important to determine whether June’s result marks the beginning of a renewed hiring slowdown or whether the stronger trend will quickly reassert itself.

The softer pace of hiring in June was fairly broad-based. Among the 250 industries surveyed, 54.4% recorded an increase in employment. That is somewhat below May’s 56.0%, but it still compares favourably with the 12‑month average of 49.7%. Manufacturing posted a modest gain of 3,000 jobs in June after slight declines in April and May, despite losses in the automotive sector. Within services, the most notable development was a decline of 54,600 jobs in accommodation and food services. This is a surprising result given that the World Cup began during the reference week of the June employment survey and that several US cities are hosting matches. Even when May’s employment gains in these industries are taken into account, the two‑month total remains negative. Among sectors facing more pronounced structural and technological changes, the information industry has recorded a net loss of 89,000 jobs over the past year, while the financial sector has lost 100,000 jobs.

The June results from the household survey were decidedly weak and dampened the positive news of a lower unemployment rate. According to that survey, employment fell by 507,000, the weakest result since May 2025, excluding the data breaks recorded in January. At the same time, the labour force declined by 720,000 people in June. Consequently, the participation rate fell from 61.8% to 61.5%, its lowest level since March 2021, when the pandemic was still having a significant impact. That said, the household survey is known for its high volatility, leaving room for hope that these results represent a temporary anomaly rather than the emergence of a genuine trend. 

It would be unwise to place too much weight immediately on June’s relatively disappointing employment figures. Admittedly, job creation slowed according to the establishment survey, but a gain of 57,000 jobs is still respectable and compares favourably with several monthly results observed since January 2025. The key question will be whether a weaker trend becomes re-established. Federal Reserve officials will likely also prefer to remain patient and assess how both the labour market and inflation evolve in the coming months, particularly as energy prices continue to decline. Even so, June’s employment report provides less justification for any rush toward additional policy rate increases than was the case with the preceding months’ data.