The Bureau of Labor Statistics reported Thursday that total nonfarm payroll employment increased by only 57,000 in June, a sharp miss against the 115,000 gain economists surveyed by Dow Jones Newswires and the Wall Street Journal had anticipated. The unemployment rate ticked up to 4.2%, while economists had expected it to hold steady at 4.3% for a fourth consecutive month.
Employment gains were concentrated in professional and business services, social assistance, and healthcare. The leisure and hospitality sector, however, shed jobs, a surprising development given the ongoing World Cup, which began June 11 and runs through July 19 across 11 U.S. venues.
Compounding the disappointment, the BLS revised down May's job gains to 129,000 from the initially reported 172,000, and April's figure was cut to 148,000 from 179,000. Combined, the revisions subtracted 74,000 jobs from the prior two months.
Stephen Coltman, head of macro at 21shares, said the data could force a reassessment of Federal Reserve policy. “The market was braced for a strong jobs report, but this was a big miss and came with significant downward revisions to prior months,” he said. “The market has priced additional tightening from the Fed this year, but that looks increasingly unwarranted by the data.”
The report lands as Fed Chair Kevin Warsh, who succeeded Jerome Powell, navigates his first months in office. Warsh has inherited an inflation environment that had fueled speculation of rate hikes, but the weak jobs data may ease that pressure. “Inflation expectations have collapsed and the current policy setting is becoming increasingly restrictive as a result,” Coltman added. “This sets up a dovish pivot for the Fed later in the year.”
Bradford Smith, portfolio manager at Janus Henderson Investors, noted that June’s print is the weakest since February and follows last month’s “barnburner.” He said the data “takes some of the pressure off of the inflation fighting institution to hike near term,” but cautioned that Warsh has previously indicated he only considers jobs data meaningful after the third revision.
Bill Adams, chief U.S. economist at Fifth Third Commercial Bank, said in a note that “June’s cool payrolls growth and lower energy prices make the pressures for rate hikes at the next few decisions less urgent.” The Fed held rates steady at its first meeting under Warsh last month, following three consecutive cuts in 2025, the last of which occurred in December.
The weakness in hospitality employment drew particular scrutiny. Brad Conger, chief investment officer at Hirtle & Co., said the data “confirming anecdotal evidence from hoteliers that the World Cup boost was proving to be a fool’s paradise.” However, Jamie Cox, managing partner at Harris Financial Group, dismissed the hospitality numbers as “misleading,” arguing there is “zero chance leisure and hospitality posts a negative print in the midst of the World Cup.” He expects upward revisions in coming months.
For advisors, the data underscores the uncertainty around the Fed’s trajectory under Warsh, especially as President Donald Trump has publicly pressured the central bank to lower rates. The mixed signals from the labor market, combined with moderating oil prices, suggest the Fed may remain on hold at its next meeting. Meanwhile, the broader economic backdrop includes a 10.8% surge in global wealth in 2025 and a report that 44% of Americans are cash-poor, even among those earning over $75,000.
