WASHINGTON (Reuters) -U.S. job openings and hiring decreased in June amid steep declines in the accommodation and food services sector, pointing to a further slowdown in labor market activity.

Job openings, a measure of labor demand, dropped 275,000 to 7.437 million by the last day of June, the Labor Department's Bureau of Labor Statistics said in its Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday. Economists polled by Reuters had forecast 7.50 million unfilled jobs. 

Hiring fell 261,000 to 5.204 million in June. Uncertainty over where tariff levels will eventually settle has left businesses hesitant to boost hiring. That has been evident in the high number of people collecting unemployment benefits.

Accommodation and food services job openings declined 308,000 while hiring in the sector was down 106,000. This sector has been one of the drivers of job growth. Employers are, however, not laying off workers on a large scale following difficulties finding workers during and after the COVID-19 pandemic. Layoffs slipped 7,000 to 1.604 million last month. 

A Reuters survey of economists expects the government's closely watched employment report on Friday will likely show nonfarm payrolls increased by 102,000 jobs in July after rising 147,000 in June. The unemployment rate is forecast increasing to 4.2% from 4.1% in June.

Economists expect the Federal Reserve will keep its benchmark interest rate in the 4.25%-4.50% range after the end of a two-day policy meeting on Wednesday, despite pressure from President Donald Trump to lower borrowing costs. 

The U.S. central bank cut rates three times in 2024, with the last move coming in December.