In June 2026, US Non-Farm Payrolls (NFP) rose by just 57,000 — roughly half the 110,000 gain that Wall Street consensus had forecast.

The American labor market, whose resilience had been widely praised in recent weeks, has clearly lost momentum. May’s NFP figure was revised down to +129,000 from its initial reading, making the June miss look even starker.

The unemployment rate edged down from 4.3% to 4.2% — but the good news ends there. The decline was driven by a drop in the labor force participation rate, which fell 0.3 percentage points, from 61.8% in May to 61.5% in June. In other words, fewer Americans were looking for work, not more people finding it.

The disappointing report immediately revived a question that had been gaining traction on Wall Street: will Fed Chair Kevin Warsh actually follow through on raising interest rates?

No inflation surprise from wages — but pressure remains

On the wage front, there were no surprises. Average hourly earnings rose 3.5% year-over-year, in line with expectations, and 0.3% month-over-month, also as forecast.

The annual trend, however, remains distinctly elevated — and that matters, because Warsh himself stated at the ECB’s annual central banking forum in Sintra, Portugal, on July 1, 2026, that US inflation remains “too high.”

Until yesterday, the prevailing narrative in financial markets was one of stubborn above-target inflation paired with a resilient labor market — a combination that gave Warsh’s hawkish pivot its justification.

The hawkish turn under Warsh: is it still on track?

Today’s NFP data suddenly casts doubt on the rate hike trajectory that several economists and markets themselves had begun to price in for 2026 — ever since what has been labeled the Fed’s «hawkish pivot» under Warsh, cemented by statements following the FOMC’s June 16–17 meeting, Warsh’s first as Fed Chair.

The biggest shock in the report was the leisure and hospitality sector, which shed 61,000 payroll jobs — in the very month when the sector was expected to benefit from the FIFA World Cup, hosted partly in the United States. The miss relative to seasonal expectations was sharp.

Goldman Sachs had forecast a +40,000 NFP print; the 57,000 outcome was slightly better than that, but the sectoral composition tells a more mixed story.

Gains were driven mainly by professional and business services (+36,000) and healthcare (+22,000, slower than the sector’s typical monthly pace). Government payrolls grew by only 8,000 — well below May’s +32,000.

The read for markets: a weaker labor market complicates Warsh’s stated desire to tighten policy. If the next several months show continued softness, the window for rate hikes may prove narrower than bond markets had priced in just a week ago.

Editor’s note

This article was originally published in Italian on money.it by Laura Naka Antonelli on July 02, 2026 as «Mercato lavoro USA, Non Farm Payrolls +57.000, metà delle attese. La Fed di Warsh alzerà davvero i tassi?». It has been translated and adapted for an international audience by the Money.it International desk.