The U.S. economy added more jobs than expected in June, signaling continued strength in the labor market despite concerns over the economic impact of broad tariffs.
According to the Bureau of Labor Statistics, nonfarm payrolls increased by 147,000, up from a revised 144,000 in May. The job gains were driven by state government and healthcare hiring, partially offset by declines in federal employment. Economists had forecast a lower figure of 111,000 jobs.
The unemployment rate dipped to 4.1%, better than the 4.3% expected and down from May’s 4.2%.
Wage growth slowed, with average hourly earnings rising just 0.2% on the month—below both the 0.3% forecast and May’s 0.4% gain.
In other labor market indicators, initial jobless claims fell slightly to 233,000 for the week ending June 28, while continuing claims held steady at 1.964 million.
The data comes amid signs that, although layoffs remain uncommon, hiring momentum has softened and workers are becoming more cautious about changing jobs, reflecting ongoing economic uncertainty.
Federal Reserve officials, who aim to support maximum employment, are closely watching labor trends—especially in light of President Donald Trump’s tariff-heavy trade policy, which many worry could weigh on growth.
Fed Chair Jerome Powell, under growing pressure from Trump to cut interest rates quickly, has maintained a measured stance, though he acknowledged this week that rate reductions could be on the table at any of the four remaining policy meetings this year. That includes this month’s meeting, which could precede the September cut currently priced in by markets, according to Morgan Stanley analysts.
At a central banking forum in Portugal, Powell remarked that without Trump’s tariffs, the Fed likely would have already started lowering rates. But the central bank held off after evaluating the scale of the tariffs and the potential for inflationary effects and economic drag.
Since Trump’s April announcement of aggressive—but now delayed—“reciprocal” tariffs, inflation has remained relatively muted. Still, concerns persist that the economic consequences could become more pronounced in the coming months.
Analysts at Vital Knowledge said the stronger-than-expected jobs number may slightly reassure investors about the economic outlook. However, they cautioned that the initial market response to the solid labor data may be hawkish, as it suggests less urgency for near-term rate cuts.
“Although no one at the Fed is likely rethinking the broader picture based on this report alone,” they added.
