Labor Market Tightens despite Tepid Job Growth as Labor Force Declines further amid Crackdown on Illegal Immigration

Nonfarm payrolls rose 57,000 jobs in June 2026 with the six-month average reaching 88,000, the highest in two years, while the labor force declined to 169.36 million amid a crackdown on illegal immigration and H-1B visa restrictions, resulting in a historically low 4.19% unemployment rate despite weak job demand. Employment gains across major industries showed healthcare and social assistance adding an average of 50,000 jobs over three months, while financial activities declined by 9,000 monthly on average due to real estate sector weakness, with prime-age labor force participation dropping to 83.3% in June as wage growth at 3.52% year-over-year lagged accelerating inflation at 4.2%.