The U.S. economy added fewer jobs than expected in June, and a lot of workers left the labor force, signaling a slow down in the labor market in June.
Employers added 57,000 new positions, according to Labor Department data released Thursday. The unemployment rate ticked down to 4.2 percent.
Continued low unemployment reflects a solid pace of hiring and few layoffs in the broader economy. However, roughly three-quarters of a million workers exited the labor market in June, the data showed, puzzling economists who are suggesting that statistical noise could be skewing the data.
Generally, economists have been surprised by the resilience of the labor market in the face of headwinds due to the Iran war, tariffs, immigration restrictions and artificial intelligence technologies.
“The labor market is probably, slowly, heading in the right direction,” said Guy Berger, senior fellow at the Burning Glass Institute. “But at this current pace, it’s going to take a long time to unwind the moderate amount of damage from the last few years. And something could knock that off course.”
Also, the Labor Department revised down the healthier job gains in April and May by 74,000, indicating the labor market was weaker than previously thought this spring. Last month, some economists had declared a rebound in the jobs market after several months of strong hiring this spring that appeared to put a cap on an extended weak patch in 2025. But that may have been premature.
“The momentum in the labor market over the past three months has hit a wall,” said Sam Kuhn, an economist at the recruitment software company Appcast. “There was no real boost in hiring from the World Cup. We’re sort of back at the [job growth] we were seeing four to six months ago.”
Forecasters expected that employers had created about 115,000 jobs in June, boosted by summer vacation and World Cup-related hiring.
But leisure and hospitality lost 61,000 positions in June — more than half in restaurants and bars — reflecting weaker seasonal hiring. That could be due to an early start to summer hiring this year that kicked off in May, due to decent weather and World Cup planning. But many analysts caution that seasonal noise could be distorting the numbers.
Professional and business services added 36,000 positions and have been showing news signs of life after a weak 2025.
Health care and social assistance industries, fueled in recent years by an aging population, also continued to add jobs in June.
But job creation in other blue-collar and white-collar sectors was frozen.
Wage growth accelerated in June, but inflation is still taking a bite out of Americans’ purchasing power. That’s a major reason Americans are so grumpy about the state of the economy. Average hourly earnings rose to $37.64 an hour, or by 3.5 percent in June, compared with a year earlier.
By contrast, the most recent inflation data, from May, shows prices rising by 4.2 percent over the previous year, to the highest level since 2023.
“People’s purchasing power has diminished,” said Elise Gould, a senior economist at the left-leaning Economic Policy Institute. “That’s not only harmful to workers and their family’s ability to afford their basic necessities, but that means less demand for goods and services, which is what drives the economy.”
Meanwhile, data showed that workers who are ages 25 to 54 drove the departure of some of the 720,000 people who fled the labor market in June, confounding economists.
“My joke is that these folks all quit their jobs to watch soccer,” said Berger, the Burning Glass Institute economist. “I think it’s just noise. It’s possible that we saw some mild decline in [employment], but it seems so out of whack with reality.”
Labor market conditions that economists describe as “low-hire, low-fire” have been hitting some demographic groups harder than others. The unemployment rate for African Americans is significantly higher than it is for White Americans. And among all age groups, young workers face some of toughest conditions finding a job. The unemployment rate for teenagers was 14.6 percent in June.
The difficulty for young workers is due to more Americans staying in their current jobs rather than switching employers, which makes more room for new hires. The rate at which American workers quit their jobs in May is the lowest in six years, according to a separate Labor Department report released this week.
“There’s just not as much movement happening in the labor market,” Kory Kantenga, LinkedIn’s head of economics for the Americas. “That makes it tough for entry-level workers to come in and backfill for someone who was previously in an entry-level role.”
Steve Thompson contributed to this report.
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