Broader Job Creation Cools, Temp Stays Hot

Key Takeaways

• June 2026 BLS Jobs Report: The labor market continued to add jobs, but at a much slower pace than expected. Employers added just 57,000 jobs in June while the unemployment rate held relatively steady at 4.2%, as many people left the labor force.   

• What Staffing Companies Should Watch: Healthcare, social assistance, and professional/business services continued to create jobs, while leisure and hospitality lost jobs.

• May 2026 JOLTS Report: Job openings remained elevated at 7.6 million, yet hiring activity stayed sluggish. Companies continue posting positions, but many are taking longer to make hiring decisions, creating a disconnect between demand for workers and actual hiring.

  
  

The June employment report paints the picture of a labor market that is slowing rather than stalling. Payroll growth came in well below expectations at 57,000 new jobs, and prior months were revised lower, reinforcing the trend toward more modest hiring. At the same time, the unemployment rate remained at a relatively healthy 4.2%, suggesting businesses are not engaging in widespread layoffs.

For staffing companies, this creates a mixed environment. Clients are still hiring, but they're taking a more cautious approach. Hiring cycles are lengthening, candidate selection has become more deliberate, and employers are looking for greater flexibility before making permanent commitments. This is creating opportunities for staffing firms that can quickly provide temporary or contract talent while clients manage uncertainty.

The May JOLTS report helps explain one of today's biggest labor market puzzles: plenty of open jobs, but slower hiring. Companies continue advertising positions because they anticipate future demand and want to maintain a pipeline of qualified candidates. However, uncertainty around interest rates, inflation, labor costs, and the overall economy has made many employers more cautious about actually extending offers. For staffing firms, temp help is up 5 months in a row.

For a deeper dive….

•            A more encompassing measure of unemployment (U6) that includes discouraged workers and those holding part-time jobs for economic reasons fell to 7.9%.

•            Prime age labor force participation rate (ages 25-54) fell to 83.3%.

•            The overall labor force participation decreased by .3% to 61.5%.  This is 1.7% below the level of February 2020.

·       In June, average hourly earnings for all employees on private nonfarm payrolls rose by 13 cents, or 0.3 percent, to $37.64. Over the year, average hourly earnings have increased by 3.5 percent. In June, average hourly earnings of private-sector production and nonsupervisory employees rose by 7 cents, or 0.2 percent, to $32.38.

·       The average workweek for all employees on private nonfarm payrolls was unchanged at 34.3 hours in June. In manufacturing, the average workweek edged down to 40.3 hours, and overtime edged up to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls declined by 0.1 hour to 33.7 hours.

•            APD reported that 98,000 jobs were added in June.