U.S. hiring and wage growth stepped down in June while the jobless rate rose to the highest since late 2021, bolstering prospects that the Federal Reserve will begin cutting interest rates in coming months.
Nonfarm payrolls rose by 206,000 and job growth in the prior two months was revised down by 111,000, the Bureau of Labor Statistics said Friday. The unemployment rate rose to 4.1% as more people entered the labor force, and average hourly earnings cooled.
Average employment growth over the last three months slowed to the least since the start of 2021, reflecting a labor market that cooled more in the second quarter than previously estimated. The data are consistent with other reports showing a sharp decline in job openings this year and a growing number of people filing for unemployment benefits.
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A sustained slowdown in hiring, combined with a recent moderation in inflation, bolsters bets that Fed policymakers will lower interest rates as soon as September. The jobs report is the last before Fed officials meet later this month.
"The downward revisions to the previous two months combined with the rise in the unemployment rate are the significant data points. Wage growth also is slowing," said Kathy Jones, chief fixed-income strategist at Charles Schwab. "All of that adds up to a slower trend."
The numbers may shift the Fed's perception of the balance of risks as unemployment increases against a backdrop of moderating inflation. Minutes from the central bank's June meeting showed
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The participation rate — the share of the population that is working or looking for work — rose to 62.6%. The rate for workers ages 25-54, also known as prime-age workers, increased to a 22-year high of 83.7%.
In June, about three-fourths of the job gains were in healthcare and government. One concerning sign was the steepest slide in temporary-help employment in more than three years. Manufacturing payrolls decreased by the most since February.
