U.S. Jobs Growth Slows; Unemployment Falls as Participation Drops

In June, U.S. nonfarm payrolls increased by 57,000, below economists' expectations. Payroll gains for April and May were revised downward, reducing previously reported employment growth for those months.

The unemployment rate declined to 4.2% in June. The labor force participation rate fell to 61.5%, the lowest in more than five years, indicating fewer people were actively looking for work.

Initial claims for unemployment insurance were roughly unchanged in the latest week, showing no sharp rise in layoffs despite slower hiring.

By industry, leisure and hospitality recorded the largest job decline, a notable outcome given the sector's usual seasonal hiring in early summer. Health care and social assistance provided the largest employment gains. Construction and manufacturing added jobs, while the information sector saw employment fall for the seventeenth time in 18 months.

Average hourly earnings rose 3.5% year over year in June. Core personal consumption expenditures inflation was about 3.4% year over year, providing a context for wage and price trends.

Financial markets reacted to the report. U.S. Treasury yields fell and the S&P 500 opened higher after the data release. The U.S. dollar weakened; EUR/USD traded near 1.1446. Gold rose about 2.4% and Bitcoin about 2.6% following the report. Market pricing continued to reflect the possibility of further Federal Reserve moves later this year.

The June data include smaller monthly job gains, downward revisions to prior months, a drop in participation, and mixed results across sectors.