Washington, D.C.: The U.S. economy added 147,000 jobs in June, exceeding Wall Street’s expectation of 110,000 and signaling continued resilience in the labor market, despite slowing momentum in parts of the economy. The stronger-than-expected numbers have led markets to pull back on expectations of a July interest rate cut by the Federal Reserve.
The data, released Thursday by the Bureau of Labor Statistics (BLS), also included an upward revision for May’s job gains to 144,000. April was revised up slightly to 158,000.
Unemployment Falls to 4.1%
The unemployment rate dropped to 4.1%, below the forecasted 4.3%, marking the lowest reading since February. However, the decline came as labor force participation slipped to 62.3%, its lowest since late 2022, with 329,000 individuals exiting the labor force.
A broader measure of joblessness, which includes discouraged and part-time workers, fell to 7.7%, the lowest since January.
Despite the headline strength, the household survey showed a smaller gain of 93,000 jobs, and the number of people not seeking work in the past four weeks jumped by 234,000, totaling 1.8 million.
Market Reaction and Fed Outlook
Markets reacted quickly. Treasury yields climbed, while stocks rose, pricing out the possibility of a Fed rate cut this month. According to the CME FedWatch tool, odds for a July move fell to 4.7%, down from 23.8% just a day earlier.
“The solid June jobs report confirms that the labor market remains resolute and slams the door shut on a July rate cut,” said Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments.
“Today’s good news should be treated as such by the markets, with equities rising despite the accompanying pickup in interest rates.”
The Fed has held its benchmark interest rate steady at 4.25%–4.5% since December. President Donald Trump has publicly pressured the Fed for a rate cut and called for Chair Jerome Powell’s resignation in a Truth Social post on Wednesday.
Government Hiring Drives Growth
Government employment led job gains in June with 73,000 new roles, mainly driven by state and local hiring, particularly in public education, which added 40,000 jobs. The federal government, impacted by cost cuts under the so-called Department of Government Efficiency, shed 7,000 jobs.
Other key sectors:
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Health care: +39,000
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Social assistance: +19,000
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Construction: +15,000
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Manufacturing: −7,000
Most other private sectors saw minimal change, according to the BLS.
Wage Growth and Hours Worked
Average hourly earnings increased by 0.2% month-over-month and 3.7% year-over-year, showing moderate wage growth that is unlikely to spur inflation concerns. The average workweek ticked down slightly to 34.2 hours.
The BLS also noted that full-time employment surged by 437,000, while part-time roles declined by 367,000, indicating a tilt toward more stable jobs.
Claims Fall, Confidence Steady
In a separate report, the Labor Department said initial unemployment claims for the week ending June 28 fell to 233,000, beating estimates and further underscoring the labor market’s relative strength.
“The U.S. job market continues to largely stand tall and sturdy, even as headwinds mount,” said Cory Stahle, economist at Indeed Hiring Lab. “But it may be a tent increasingly held up by fewer poles.”
With inflation holding steady and job growth cooling only slightly, attention now turns to September as the earliest likely window for the Fed’s next move.
