The U.S. labor market lost momentum in June, with total nonfarm payroll employment rising by just 57,000, the smallest gain since February’s outright decline. Downward revisions to April and May payroll estimates subtracted a combined 74,000 jobs from previously reported totals, reversing the sizable upward revisions reported a month earlier and suggesting underlying hiring momentum was weaker than initially reported. The unemployment rate edged down to 4.2%, essentially unchanged from a year ago, but the decline reflected a shrinking labor force rather than stronger hiring, as both overall and prime-age labor force participation fell notably in June.

Wage growth accelerated modestly in June. Average hourly earnings rose 3.5% from a year earlier to $37.64, up from a 3.4% year-over-year pace in May. This pace is 0.3 percentage points lower than a year ago. Importantly, wage growth has been outpacing inflation for nearly two years, which typically occurs as productivity increases.

National Employment

According to the Employment Situation Summary reported by the Bureau of Labor Statistics (BLS), total nonfarm payroll employment increased by 57,000 in June, following a downwardly revised gain of 129,000 in May. Revisions to prior months were broadly negative this month, a reversal from May’s positive trend. The change for April was revised down by 31,000, from +179,000 to +148,000, while the change for May was revised down by 43,000, from a preliminary +172,000 to +129,000. Combined, these revisions subtracted 74,000 jobs from previously reported totals, compared with the 93,000 upward revisions reported in the prior month.

Job growth in 2026 has moderated following a stronger spring. Through June, monthly payroll gains have averaged 92,000 on the current data vintage, down from the 114,000 pace reported through May, reflecting both June’s soft print and the downward revisions to April and May. This compares with an average of just 10,000 per month in 2025 and 122,000 per month in 2024. Over the past 12 months, total nonfarm employment has grown by 506,000, a considerably slower pace of expansion than earlier in the cycle.

The unemployment rate declined to 4.2% in June from 4.3% in May, essentially matching its year-ago level of 4.1%. However, the improvement was driven by a shrinking labor force rather than stronger hiring. Over the month, the number of unemployed persons fell by 213,000 to 7.1 million, while the number of employed persons declined by 507,000. Combined, the civilian labor force contracted by 720,000 in June.

Meanwhile, the labor force participation rate—the proportion of the population either looking for a job or already holding a job—fell 0.3 percentage points to 61.5% in June. This marks the lowest level since March 2021 and remains well below its pre-pandemic level of 63.3% recorded at the start of 2020. Among prime working-age individuals (aged 25 to 54), the participation rate dropped 0.6 percentage points to 83.3%, one of the sharpest single-month declines of this cycle and an indication that June’s pullback in labor force participation was not confined to either younger or older workers.

Job gains in June were concentrated in a handful of sectors. Employment increased by 36,000 in professional and business services, 25,000 in social assistance, and 22,000 in health care. In contrast, leisure and hospitality shed 61,000 jobs, reflecting weaker than usual seaonal hiring.

Construction Employment

Employment in the overall construction sector rose by 11,000 jobs in June, following a gain of 6,000 in May. Within the industry, residential construction employment declined by 8,600, while non-residential construction added approximately 19,900 jobs.

Residential construction employment now stands at 3.3 million in June, including 916,000 workers employed by builders and remodelers and 2.4 million residential specialty trade contractors.

The six-month moving average of job gains for residential construction employment remains negative, reflecting an average monthly loss of 3,517 jobs and declines in four of the past six months. Over the last 12 months, residential construction has shed a net of 48,800 jobs, marking the sixteenth consecutive month of annual decline and the longest stretch of annual losses since the Great Recession. However, residential construction has gained 1,283,400 positions from its post-Great Recession low.

Meanwhile, the unemployment rate for construction workers rose to 6.2% in June on a seasonally adjusted basis, up from 5.2% in May and 3.7% in April. This marks the second consecutive monthly increase and the highest reading since July 2021. A year earlier, the construction unemployment rate stood at 4.5%. The continued increase suggests softness in construction labor market conditions.