In June 2026, US Non Farm Payrolls (NFP) rose by just 57,000 — roughly half the 110,000 gain the analyst consensus had forecast. The labor market, whose resilience had been loudly celebrated in recent weeks, has visibly softened: in May, NFP had jumped by 129,000 (a figure that has since been revised downward).

The unemployment rate dipped from 4.3% to 4.2% — but the improvement is deceptive. The decline was driven by a drop in the labor force participation rate, which fell 0.3 percentage points to 61.5%, suggesting workers are leaving the workforce rather than finding jobs.

On the wage side, no surprises: hourly earnings rose 3.5% year-over-year, in line with forecasts, and 0.3% month-over-month, matching expectations. The annual trend remains solid — but that is precisely what has kept inflation a concern for Fed Chair Kevin Warsh, who stated at the ECB’s Sintra forum in Portugal that US inflation remains too high.

Until yesterday, the prevailing narrative in the United States was one of inflation well above the Fed’s 2% target paired with a resilient labor market. Today’s data complicates that picture considerably.

A weaker jobs market: will Warsh’s hawkish rate hike actually happen?

Today’s NFP reading has abruptly seeded doubts about what will happen to US interest rates — which several economists and financial markets had begun pricing in for a possible hike over the course of 2026, following what had been termed the hawkish pivot of the Fed under Warsh. That pivot was signaled in the statements released after the last Fed meeting — Warsh’s first as chairman — on June 16–17, 2026.

The most striking weakness in the report came from the leisure and hospitality sector, which shed 61,000 jobs in June. That is the very month when analysts had expected the sector to receive a meaningful boost from the FIFA World Cup being hosted in the United States. Goldman Sachs, for instance, had forecast an NFP increase of just 40,000 — itself a cautious estimate — yet the actual print still managed to fall short of that low bar on a net basis across the broader economy.

Overall, job creation was supported primarily by professional and business services (+36,000), healthcare (+22,000, though at a pace below the sector’s recent norm), and government (+8,000, well below May’s +32,000).

Expert comment: less pressure on the Fed to tighten

Filippo Fiori, Senior Advisor at Otala.Markets, offered a concise reading of the data, noting that «only 57,000 new jobs were created, a figure below expectations, despite the boost in demand for temporary workers linked to the World Cup.» He also flagged that «revisions to prior months’ data were negative» — a further signal of underlying softness.

Fiori went on to observe that the figures demonstrate «the US economy is no longer generating employment at the pace that investors have come to expect in recent years» — a dynamic that «further reduces the probability of a rate hike by the Federal Reserve, a scenario the market had already considered unlikely.»

The advisor added a counterintuitive note: «paradoxically, this dynamic could offer additional support to US equity markets, through the expectation of a more accommodative monetary policy.» He also underscored a structural dimension: «the United States, too, is beginning to feel the effects of an aging population. Add to this the reduction in immigration flows resulting from the Trump administration’s policies, a factor that further constrains labor force growth.»

In short: a jobs report that fell short on almost every dimension is, in the perverse logic of markets, potentially good news for equities — and bad news for the rate-hike hawks who had gathered around Warsh’s Federal Reserve.

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.