Kiplinger Jobs Outlook: Job Growth Will Be Moderate, on Average
Low June growth and downward revisions to April and May put 2026’s first-half average monthly jobs gain at 92,000.
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Low June job growth of 57,000 and large downward revisions in April and May are evidence of moderate, not strong, average job creation so far this year. There were 92,000 jobs added each month, on average, in the first six months of 2026. This moderate level, or slightly higher, is likely to remain the average going forward.
The June number was partly payback for strong growth in the previous three months, but it mostly suffered from a large decrease in employment at hotels and in food service. This drop was also a partial pullback from an increase in May, and is probably related to changes in staff planning for World Cup attendees. Hotels and restaurants likely overstaffed in preparation and made cuts once the actual demand became clear. Elsewhere, job gains were more normal: Modest increases in construction and manufacturing, a decline in retail after two solid months of gains, a moderate increase in professional and business services that included more temporary help, a typically largish rise in health care, and flat-to-modest gains in other sectors. Of note is that federal government employment, excluding the Postal Service, rose modestly for the second month after 16 months of declines.
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One concern to watch is that the government’s jobs survey of households, which is smaller than the payroll survey of businesses, has been recording large monthly declines this year. The household survey can fluctuate more because of its smaller size, but it could also indicate potential weakness in hiring that may be discovered only later, when the payroll survey’s annual reconciliation is made with the Census of Employment and Wages.
The unemployment rate dipped to 4.2% in June due to a drop in the labor force. A large number of potential workers stopped looking for work, resulting in the lowest labor participation rate since the pandemic. Weekly initial unemployment claims remain low overall.
Average hourly earnings gains rose 3.5% over the past 12 months, and rose 3.4% for production workers (blue-collar and nonadministrative employees). The more accurate quarterly Employment Cost Index for June will be released on July 31.
The lackluster June jobs report and downward revisions for April and May will ease concerns at the Federal Reserve that the economy might be overheating. Unless inflation data show a further uptick, it’s likely that the Fed will keep its benchmark short-term interest rate unchanged at its next meeting, on July 29.
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