US hiring slows in June as leisure sector cuts jobs

U.S. nonfarm payrolls increased by 57,000 in June. The official unemployment rate fell to 4.2% from 4.3% and the labor force participation rate declined to 61.5% from 61.8%.

The payroll gain missed the 113,000 consensus and followed an upward revision to May, which showed 129,000 jobs after adjustments. The largest single-sector decline in June was leisure and hospitality, which shed 61,000 positions. Information employment fell by 9,000 and trade, transportation and utilities declined by 4,000.

Gains were concentrated in education and health services, which added 69,000 jobs, professional and business services with 36,000, construction with 11,000 and manufacturing with 3,000.

Average hourly earnings rose 0.3% month-on-month and 3.5% year-on-year. The broader underemployment measure decreased to 7.9% from 8.1%.

A private payroll report from ADP released the day before showed roughly 98,000 private-sector jobs added in June, with services accounting for about 96,000 of that total and goods-producing sectors adding about 2,000. Short-term differences between ADP and the Bureau of Labor Statistics are common.

The May JOLTS report recorded 7.594 million job openings. The largest counts of open positions were in education and health services at 1.539 million and professional and business services at 1.485 million, consistent with those sectors' strength in the establishment survey.

The CME FedWatch tool assigned an 82.4% probability that the Federal Reserve will keep the target federal funds rate in the 3.50–3.75% range at the July meeting. For the September meeting, probabilities were nearly split, with about 46% pricing no change and about 46% pricing a move to 3.75–4.00%.