The US economy added fewer jobs than expected in June, while economists said downward revisions to payrolls growth in the previous two months has clouded a recent revival in the labor market.
Total nonfarm payrolls rose by 57,000 last month, representing the weakest tally since February, the Bureau of Labor Statistics said Thursday. The consensus was for an 113,000 increase in a Bloomberg-compiled survey. May's gain was downwardly revised to 129,000 from the initial 172,000, while April's tally was lowered to 148,000 from 179,000.
"While the labor market has clearly turned a corner, this morning's weaker headline print combined with the downward revisions suggests it's stopping short of a full-blown reacceleration," TD Economics Senior Economist Thomas Feltmate said in a separate note.
Private payrolls increased by 49,000, trailing the consensus for growth of 107,000, decelerating from 97,000 the month prior, the BLS reported. The unemployment rate ticked down to 4.2% from 4.3%, which was Wall Street's projection.
"Job growth is still considerably stronger than a year ago, and is also running slightly above the estimated breakeven rate, which helped to push the unemployment rate to a twelve-month low," according to Feltmate.
The BLS report showed employment gains across manufacturing, construction and healthcare, while the leisure and hospitality industry recorded job losses of 61,000.
Earlier this week, ADP (ADP) data showed that private sector employment in the US increased less than projected in June. Separately, Challenger Gray & Christmas said American employers announced 45,849 layoffs last month, down 53% from May and 4% from a year earlier. The reading marked the lowest monthly total since December 2025.
The latest jobs report is unlikely to force the Federal Reserve to make a change in monetary policy immediately, as the pace of growth is "plenty strong enough to maintain a steady unemployment rate," Jefferies Chief US Economist Thomas Simons said in a note emailed to.
"There is no imperative on (the Fed's) part to do anything with rates immediately, and the softening in the pace of job growth suggests that rate hikes are very unlikely to be necessary this year," according to Simons.
Fed Chair Kevin Warsh suggested Wednesday that the central bank may be headed for another policy pause as inflation risks have eased. Warsh said the Fed remains committed to deliver price stability in the US, reiterating what the Federal Open Market Committee said in its June policy statement.
Markets will now turn their attention towards the consumer price index for June, scheduled to be released later this month, Feltmate said. "While a hotter reading could swing odds back in favor of a summer hike, we still think the bar for policy tightening is high," Feltmate added.
Markets widely expect the FOMC to keep rates unchanged again when it meets toward the end of this month, according to the CME FedWatch tool.
