Job Postings By Industry

Breaking it Down Further

Consumer moods and spending patterns remained somewhat disconnected in the second quarter. Sentiment remained weak and continued its historical reduction, with the University of Michigan’s index at 44.8 in May, but consumers still spent enough to keep demand from breaking down. Advance Census estimates show retail and food services sales rose 0.9 percent in May and were up 6.9 percent from a year earlier, while total sales for March through May were 5.3 percent above the same period in 2025. That combination suggests households remained uneasy about inflation, job prospects, and geopolitical risks, but their spending behavior had not yet shifted in a way that would point to a sharper labor-market contraction.

Headline job growth was positive for the quarter, but the pattern became less reassuring as the data evolved. Payrolls increased by 148,000 in April, 129,000 in May, and only 57,000 in June after revisions, leaving average monthly growth near 111,000. That was enough to keep the expansion intact, but the June slowdown and the 74,000 downward revision to April and May weakened the earlier impression that hiring was reaccelerating. The unemployment rate still moved only modestly, holding at 4.3 percent in April and May before slipping to 4.2 percent in June, but the mix of slower payroll growth and lower participation suggests a labor market that is cooling beneath a relatively steady unemployment rate.

Labor-force participation became one of the clearest signs of underlying softness. The participation rate was already low at 61.8 percent in April and May, then fell to 61.5 percent in June, while the employment-population ratio edged down to 59.0 percent. That means the decline in the unemployment rate at the end of the quarter was not simply a story of stronger employment. It also reflected a smaller measured labor force. Long-term unemployment remained elevated as well: workers unemployed for 27 weeks or longer accounted for 27.3 percent of all unemployed people in June and were up 286,000 over the year. These details point to a market in which some workers are staying disconnected from stable employment even as the headline jobless rate remains contained.

Sector performance became more uneven across the quarter. Health care and social assistance remained reliable sources of job growth, but the pace in health care slowed in June relative to its prior 12-month average. Professional and business services was a more encouraging development, adding 36,000 jobs in June and 172,000 since its October 2025 low. Leisure and hospitality, by contrast, showed how fragile some of the quarter’s strength was: after adding 40,000 jobs in May, the sector lost 61,000 jobs in June because of weaker-than-usual seasonal hiring. This pattern suggests that demand for labor did not collapse, but gains were increasingly concentrated and vulnerable to monthly reversals.

The second quarter reinforces the view that the U.S. labor market is slowing. JOLTS data showed job openings held around 7.6 million in May, while the quits rate remained at 1.9 percent, consistent with a low-turnover environment in which workers are less willing or able to move, and employers are not expanding headcount aggressively. At the same time, wage growth remained moderate: average hourly earnings rose 0.3 percent in June and were up 3.5 percent over the year. Hiring continued, layoffs did not become the dominant story, and consumer spending remained resilient, but lower participation, weaker June payrolls, subdued quits, and uneven industry gains point to a labor market with less momentum heading into the third quarter.

Overall, the second quarter points to a U.S. labor market that remains durable, but sensitive to inflation, policy, and global risk. Payroll growth improved from the first quarter, advertised postings strengthened in several goods-moving and manufacturing-related industries, and consumer spending remained strong enough to support continued hiring. Still, June’s sharp slowdown, lower labor force participation, subdued quits, and uneven sector performance suggest that momentum is becoming more fragile. Inflation remains a central concern, especially after energy-price volatility tied to the Iranian conflict briefly pressured real labor income during the quarter. If tensions continue to disrupt shipping routes, oil markets, or broader global commerce, businesses could face higher transportation and input costs just as hiring is already cooling. For the Federal Reserve, that combination complicates the path forward: labor conditions are softening, but renewed inflation pressure may limit the case for easier policy.