The U.S. economy added 57,000 jobs in June, the Bureau of Labor Statistics reported on July 2, well below both the consensus estimate of 115,000 and the downwardly revised 129,000 added in May. Revisions to April and May removed a combined 74,000 jobs from what had been reported for those months, further eroding a picture of a labor market that appeared more resilient on earlier readings.

A decline in the unemployment rate to 4.2% came alongside a drop in the labor force participation rate, which fell 0.3 percentage points to 61.5%, its lowest reading since March 2021. Household employment fell by 507,000 during the month, a divergence from the establishment survey large enough to complicate any straightforward reading of June conditions.

Sector results were mixed. Professional and business services led payroll gains with 36,000 new positions, followed by social assistance at 25,000 and health care at 22,000. Leisure and hospitality shed 61,000 jobs, which the Bureau of Labor Statistics attributed to weaker-than-usual seasonal hiring. Most other industries, including construction, manufacturing, and retail, were little changed. The June total was roughly in line with the 12-month average monthly gain of 36,000, even as it fell well short of near-term forecasts.

Average hourly earnings rose 0.3% to $37.64, keeping the year-over-year pace at 3.5%, with the average workweek unchanged at 34.3 hours. Markets moved quickly on the release, with futures rising and the 2-year Treasury yield falling 3.5 basis points to 4.13%, as traders reduced the probability of a rate increase at the Federal Reserve’s next meeting, scheduled for the end of July.