The US economy lost 125,000 jobs in June, more than economists had forecast, as thousands of temporary census jobs ended and private hiring grew less than expected.

And though the unemployment rate unexpectedly fell to 9.5% from 9.7%, the lowest in a year, it was largely due to more people dropping out of the labor force.

The report was the latest sign that the economic recovery may be faltering. "Overall what this does is it reinforces the market's view that the U.S. recovery is losing steam,'' said Greg Salvaggio, vice president of trading at Tempus Consulting in Washington. [ CNBC ]