The US labor market delivered a notable surprise in June jobs data as growth outpaced economist expectations.
The latest data from the Bureau of Labor Statistics shows that 147,000 new jobs were added last month, well above the expected 110,000.
In a surprising twist, the unemployment rate also dipped to 4.1%, lower than the forecasted 4.3%, suggesting the job market is holding up better than many had predicted.
The June jobs data becomes more surprising when seen in context with private sector data released by ADP on Wednesday which informed that private payrolls lost 33,000 jobs in June.
This better-than-expected result comes as talk about interest rates continues, with President Donald Trump calling for cuts to keep the economy on a steady path.
Subdued uptick in hourly earnings
Alongside the solid job gains and dip in unemployment, wages continued to climb as average hourly pay rose by 0.2% for the month and is up 3.7% compared to last year.
The average workweek, however, inched down a bit to 34.2 hours.
Government jobs led the way in hiring, adding 73,000 positions thanks to strong growth at the state and local levels, especially in education.
Meanwhile, the federal government lost 7,000 jobs, still feeling the effects of cuts tied to Elon Musk’s Department of Government Efficiency.
Healthcare continued to show strength, with 39,000 new jobs added, and the social assistance sector chipped in with another 19,000.
Dow Futures edged higher on Thursday ahead of the release of June jobs data and Wall Street is expected to react with optimism to the better-than-expected report.
June jobs data may impact interest cut dynamics
June jobs data report lands as attention sharpens on what the Federal Reserve will do next, especially with more signs pointing to a cooling job market.
US President Donald Trump has been pushing the Fed to cut interest rates, which have been stuck between 4.25% and 4.5% since December, but Fed chief Jerome Powell has sided with a measured approach.
Speaking on Tuesday, he said that while a rate cut is possible at any upcoming meeting, the overall strength of the economy gives the Fed some breathing room to wait and watch how things unfold.
Beyond the data
While the unemployment rate did go down, it wasn’t necessarily for the right reasons.
A big part of the drop came from fewer people being counted as part of the labor force, either because they stopped looking for work or left the workforce entirely.
The labor force participation rate slipped to 62.3%, its lowest level since late 2022, as about 329,000 people moved out of the labor force altogether.
At the same time, the household survey, which helps in determining the unemployment rate only showed a modest gain of 93,000 jobs.
That gap between the surveys points to a softer job market than the headline numbers might suggest.
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