Private Sector Jobs Contract: Private sector employment declined in June for the first time since early 2023, pulling the 3-month growth rate down to its slowest pace since August 2020. But with unemployment low and tariff-related inflation uncertain, the Fed may struggle to justify the number of rate cuts that some are hoping for—unless the jobs market cracks further.
Smaller Firms Tap the Brakes on Hiring: Hiring at smaller businesses has slowed sharply in 2025, averaging only 5,300 jobs per month—well below last year’s average of nearly 40,000.
Softness in Both Services and Manufacturing: Employment in both services and manufacturing is weakening, with ISM employment indices in contraction—services down in three of the last four months and manufacturing has remained in negative territory for most of the year.
Fewer Industries Are Adding Jobs: The private payrolls diffusion index, which tracks how many private-sector industries are adding versus cutting jobs, declined again in recent months—marking another leg down from already weak levels for a non-recessionary period.
Job Seekers Are Taking Longer to Find Work: Continuing unemployment claims are at their highest level since 2021, suggesting that people are struggling to find new jobs.
Rehire Rates Hit New Cycle Low: Rehire rates have dropped to a new cycle low, a trend that is likely to restrain wage growth across industries.
Discouraged Workers on the Rise: June saw the largest increase in discouraged workers—those who looked for a job in the past year but haven’t searched in the last four weeks—since the early days of the pandemic.
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