US economy added jobs at a slower pace than expected in June

The U.S. economy added jobs at a steady pace in June despite headwinds caused by elevated inflation and uncertainty over the Iran war's economic impact. The Bureau of Labor Statistics on Thursday reported that employers added 57,000 jobs in June. That figure was below the estimate of economists polled by LSEG, who estimated 110,000 jobs added. The unemployment rate dipped to 4.2%, which was also below the estimate of 4.3%. Revisions were made to the payroll numbers for the prior two months, with April revised down by 31,000 from a gain of 179,000 to 148,000; while May's report was revised down from 43,000 from a gain of 172,000 to 129,000. Taken together, employment in April and May was 74,000 jobs lower than previously reported. BLS TOOK STEPS TO FIX DATA RELEASE FAILURES BUT WATCHDOG SAYS MORE SAFEGUARDS ARE NEEDED Private payrolls added 49,000 jobs in June, well below the LSEG poll's prediction of 110,000 jobs. May's private sector job gains were also revised down from a gain of 120,000 to 97,000. Government payrolls grew by 8,000 jobs last month, while the increase of 52,000 in May was revised down to 32,000 jobs. The manufacturing sector added 3,000 jobs in June, in line with the estimate of economists polled by LSEG. May's figures were revised down from a gain of 7,000 jobs to a loss of 2,000. Healthcare continued to add jobs last month, with the sector adding 21,500 jobs in June. That's a slower pace than the average monthly gain of 38,000 over the last 12 months. Hospitals added 9,200 jobs for the month, contributing to a significant portion of the gain. Leisure and hospitality employment declined by 61,000 in June, which reflected weaker than usual seasonal hiring. The sector has shown little net change in employment over the course of 2026 to date. FEDERAL RESERVE LEAVES INTEREST RATES UNCHANGED AS WARSH ERA BEGINS The number of long-term unemployed, defined as those who have been jobless for 27 weeks or more, was little changed at 1.9 million in June but is up 286,000 over the year. The long-term unemployed accounted for 27.3% of all unemployed people last month. The number of people employed part-time for economic reasons also held relatively steady at 4.7 million in June. These individuals would've preferred full-time employment but were working part-time because their hours were reduced, or they weren't able to find full-time jobs. The labor force participation rate decreased by 0.3 percentage points to 61.5% in June, while the employment-population ratio edged down by 0.2 percentage points to 59%. Both figures were changed little over the year after accounting for annual population control adjustments. ACTING LABOR SECRETARY PRESSURES 53 STATES AND TERRITORIES TO TACKLE UNEMPLOYMENT INSURANCE FRAUD LPL chief economist Jeffrey Roach noted that, "Firms are still adding to their payrolls, but hours worked are below pre-pandemic levels as firms cut back labor utilization." "A concerning trend is the increasing flow of individuals dropping out of the job market altogether. For now, the labor market is holding, giving the Fed opportunity to stay focused on price stability," Roach added. Seema Shah, chief global strategist at Principal Asset Management, said that the June jobs report "paints a softer picture of the labor market than investors have become accustomed to, but it should ultimately be welcomed by markets." "The slowdown in payroll growth challenges the narrative of renewed labor market strength that has been building in recent months but, importantly, reinforces the view that the Federal Reserve is under little pressure to tighten policy," Shah said. GET FOX BUSINESS ON THE GO BY CLICKING HERE The Federal Reserve is expected to hold interest rates steady in the near term due to stubborn inflation remaining elevated above the central bank's 2% target, though the market sees a strong possibility of rate hikes later this year. The CME FedWatch tool shows a 41.8% probability that the Fed will hike the federal funds rate by 25-basis-points from its current target range of 3.5% to 3.75%, versus a 21.7% chance of rates remaining at their current level. The benchmark S&P 500 index rose about 0.7% on Thursday during morning trading following the release of the June jobs report. The Dow Jones Industrial Average was up about 0.6%, while the Nasdaq Composite was up a little more than 0.7%.