US employers added fewer jobs in June than projected, illustrating a labor market that is gradually moderating, even as wage growth remained firm.

Nonfarm payrolls increased 209,000 after downward revisions in the prior two months, a Bureau of Labor Statistics report showed Friday. The unemployment rate fell to 3.6%.

The latest figures suggest the labor market is losing some steam as high interest rates and months of sluggish consumer spending feed into concerns about the economy’s prospects. Yet the job market remains sufficiently healthy — and wage gains brisk enough — likely keeping Federal Reserve policymakers on track to resume their series of rate hikes at their meeting later this month, following a pause in June.

“We need to see some of the tight labor market conditions ease so the Fed feels more confident that wages will begin to ease,” Lindsey Piegza, chief economist at Stifel Financial Corp., said on Bloomberg Television.

Treasuries pared gains and stock-index futures fluctuated.

Hiring was concentrated in a few sectors, led by health care, government and construction. Payrolls fell in retail trade and transportation and warehousing. For the prior two months, payrolls growth was revised down by a combined 110,000.

The increase in average hourly earnings followed similar gains in the prior two months, and was up 4.4% from a year earlier. The average workweek edged up.

The mismatch between labor supply and demand is coming into better balance in part due to more participation. While the overall participation rate — the share of the population that is working or looking for work — held steady, for those ages 25-54, that rate climbed to a 21-year high.

In another sign of cooler labor demand, the report showed the number of people working part-time for economic reasons surged by the most since April 2020. The underemployment rate, a broader measure that includes those who prefer full-time work, increased to the highest since August.

--With assistance from Matthew Boesler, Augusta Saraiva and Hannah Pedone.

This article was provided by Bloomberg News.