The U.S. economy added 147,000 jobs in June, surpassing economists’ expectations of 110,000, according to the latest report from the Department of Labor. The unemployment rate fell to 4.1% from 4.2% in May, signaling continued strength in the labor market.
The June employment gains were primarily driven by the healthcare and education sectors, which collectively added approximately 122,000 jobs. State and local government education, as well as private healthcare and social services, offset losses and sluggish hiring in white-collar professions, such as professional and business services, which experienced job reductions.
Conversely, federal employment declined by 7,000 positions, continuing a trend observed in previous months. Revisions to April and May figures added an additional 16,000 jobs to the previously reported totals.
Despite the positive headline figures, underlying data indicates a broader economic slowdown, driven by consumer and business uncertainty, likely tied to recent tariffs introduced by the new administration. This uncertainty is expected to suppress monthly job growth, potentially reducing it to below 100,000, and slow annual wage growth to 3.5% by December.
The stronger-than-expected job growth has tempered hopes for an immediate interest rate cut by the Federal Reserve. Analysts now anticipate that any rate adjustments may be delayed until later in the year. Market expectations for a July rate cut have diminished significantly, with futures markets reducing the likelihood from 24% to 5%.
Wall Street responded positively to the news, with the Dow Jones Industrial Average rising 344 points, approaching its all-time high. The S&P 500 and Nasdaq also posted gains, reflecting investor confidence in the ongoing economic expansion. The S&P 500 and Dow rose 0.8%, while the Nasdaq gained 1%.
However, continued trade uncertainty remains a concern for investors, even as they begin focusing on the upcoming earnings season, banking on AI-driven growth in big-tech earnings.
The Federal Reserve has maintained its projection of 50 basis points in rate cuts for 2025 despite rising concerns over inflation spurred by new tariffs and a slightly increased unemployment forecast. Chairman Jerome Powell emphasized the strength of the U.S. economy and noted current monetary policy is only “modestly” restrictive.
President Donald Trump appears poised to escalate his long-standing feud with Federal Reserve Chair Jerome Powell, possibly by replacing Powell before his term ends in May 2026. Trump has criticized Powell harshly over his reluctance to cut interest rates, and reports suggest the president may announce a new Fed Chair as early as fall 2025.
Overall, while the June jobs report indicates resilience in certain sectors, the broader labor market shows signs of uneven recovery. The Federal Reserve’s cautious approach reflects the complexities of balancing economic growth with inflation control amid ongoing policy uncertainties.
