Job growth slows in June

San José, CA – The job market slowed sharply in June, to only 57,000 net new jobs, less than half the monthly increases in April and May. In addition, these two reports were revised downward a total of 74,000 new jobs. The U.S. Department of Labor’s Bureau of Labor Statistics released the report for June 2026 on July 2.

The biggest surprise of the jobs numbers was the loss of 55,000 jobs in hotels and restaurants. This was the biggest loss since the COVID pandemic in 2020. Many economists questioned this figure, given the tourism for the FIFA World Cup soccer games. But tourism, and thus employment in hotels and restaurants, has been declining under the Trump administration, while increasing in the rest of the world. Trump’s repeated claim to want to make Canada a U.S. state, his restrictions on travel visas, and harassment of tourists at U.S. borders and airports have made the United States a less desirable destination. U.S. hotels reported room booking during FIFA World Cup was below expectations, and some even said bookings were below usual summer rates.

An early sign of the impact of artificial intelligence or AI on jobs was the continued drop in information technology jobs. 9000 jobs were lost in this sector, marking the 17th time in the last 18 months jobs have been lost. Job losses in information technology and finance, which are almost all white-collar jobs most susceptible to AI replacement, have accelerated this year. In 2026, an average of more than 20,000 jobs were lost each month in these two industries.

While the unemployment rate ticked down in June to 4.2% from 4.3% in May, this was mainly because more than 700,000 workers dropped out of the labor force. This happens when jobless workers stop looking for work and are not counted as unemployed. Without this, the unemployment rate would have gone up in June to 4.5%.

Latino workers were hit especially hard, as their unemployment rate rose to 5.2% in June from 5.0% in May. At the same time, their labor force participation rate fell from 67.2% to 66%. If Latinos who dropped out of the labor force were counted as unemployed, their unemployment rate would have risen to 6.4%.

Wage growth for production and non-supervisory workers grew 3.4% from June last year, significantly behind the 4.4% increase in prices for the same workers as reported in June. The June inflation report will come out on July 14.

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