Flash Report: Unemployment Falls, Job Growth Slows in June
KEY TAKEAWAYS
- The U.S. unemployment rate fell from 4.3% in May to 4.2% in June, in line with its 12-month average. More precise data show the rate dropped from 4.296% to 4.189%.
- The modest decline in unemployment was driven primarily by fewer people entering the labor force to seek work and more unemployed people choosing to leave the labor force rather than keep looking for jobs.
- Nonfarm payroll growth slowed in June to 57,000 jobs—half as many as expected.
Unemployment
June 2026
4.189%
Precise Rate
Unemployment ticked down in June, with the headline rate coming in at 4.2%—its lowest reading since June 2025. (See the FRED chart above.) The June 2026 rate was in line with its average over the past 12 months. However, the labor force participation rate and employment-population ratio both fell to levels last seen in 2021.
Total nonfarm payrolls rose by 57,000 jobs in June, well below market expectations. In addition, prior-month job gains were revised lower; April’s estimate was revised down by 31,000 jobs (from 179,000 to 148,000), and May’s estimate was revised down by 43,000 jobs (from 172,000 to 129,000).
Taken together, June’s decline in unemployment and slower-but-positive payroll gains point to a resilient labor market. Next, the analysis takes a deeper look at how estimated flows into and out of unemployment during June affected the overall unemployment rate.
DATA HIGHLIGHTS
- While the headline unemployment rate declined to 4.2% in June, the unrounded rate shows a slightly larger decrease of 0.11 percentage points from May.
- Transitions both into and out of the labor force were the main factor behind the change in unemployment.
| Average Monthly Change in Unemployment Rate (Percentage Points) |
People Losing or Leaving Their Jobs and Becoming Unemployed |
Unemployed People Finding Jobs |
People Previously Not in the Labor Force Who Are Now Seeking Work |
Unemployed Workers Leaving the Labor Force (e.g. Discouraged Workers) |
|
|---|---|---|---|---|---|
| June 2026 | -0.11 | +0.94 | -1.04 | +1.04 | -1.08 |
| Last 3 Months | -0.02 | +0.93 | -1.05 | +1.09 | -1.02 |
| Last 12 Months | 0.00 | +0.94 | -1.07 | +1.12 | -1.01 |
| SOURCES: Bureau of Labor Statistics and St. Louis Fed Research staff’s calculations. | |||||
| NOTES: Average changes over the last 12 months exclude October and November, for which data were unavailable. Data are seasonally adjusted. The overall change is based on the precise unemployment rate for these periods; for example, the unemployment rates were 4.1888% in June and 4.2963% in May. The flow components into and out of unemployment add up to the change in unemployment with a negligible residual. See Maximiliano Dvorkin and Serdar Ozkan’s St. Louis Fed On the Economy blog post “The Recent Ins and Outs of Unemployment: Using Flows to Study Labor Market Dynamics” for more information about this method. | |||||
Shifts in labor force participation—fewer people entering the labor force to look for jobs and more unemployed people exiting the labor force—accounted for most of the change in unemployment. Other components of unemployment flows—people leaving or losing their jobs and unemployed people finding work—remained stable and near their recent averages. (See the table above.)
Citation
ldquoFlash Report: Unemployment Falls, Job Growth Slows in June,rdquo St. Louis Fed On the Economy, July 2, 2026.
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