The U.S. labor market showed signs of slowing in June, with job growth falling short of expectations amid elevated inflation fueled by the Iran war. The country added just 57,000 jobs, a sharp decline from the 129,000 jobs added in May. Despite this, the unemployment rate edged down slightly from 4.3% to 4.2%, remaining low by historical standards.
Kevin Hassett, director of the White House's National Economic Council, downplayed the June report, emphasizing a positive trend over the past few months. 'If you smooth through the ups and downs over the last three or four months, we're on a really steep upward trajectory,' Hassett told reporters. The first half of 2026 saw an average of 92,000 jobs added per month, a significant improvement from the 7,000 jobs lost monthly in the second half of 2025.
The professional and business services sector led job gains in June, adding 36,000 positions, while healthcare also saw notable growth, though at a slower pace. The Middle East conflict, which began on Feb. 28, disrupted global oil supply through the Strait of Hormuz, contributing to one of the largest oil shocks ever recorded. Annual inflation stands at 4.2%, more than twice the Federal Reserve’s target rate of 2%.
Futures markets indicate a 64% chance of an interest rate hike in September, posing a risk for corporations seeking to keep borrowing costs low. Federal Reserve Chair Kevin Warsh reiterated the Fed's commitment to bringing inflation down to its desired level. 'Persistently high prices are a burden for the American people,' Warsh said. 'This committee will deliver price stability.'
Warsh also weighed in on the potential impact of AI on the labor market, suggesting that the technology could create jobs and boost productivity. 'This is a big paradigm shift both for the conduct of our policy and for our economies,' Warsh said. 'I think the jobs will be greater. Prosperity will be stronger.'