US Economy Adds 147,000 Jobs in June as Unemployment Falls to 4.1%

US Job Market Beats Expectations in June, But Underlying Weaknesses Emerge

The US economy added 147,000 jobs in June, surpassing forecasts and showcasing continued strength in the labor market. The unemployment rate fell to 4.1%, down from 4.2% in May, according to Thursday’s release from the Bureau of Labor Statistics (BLS).

While the headline numbers were stronger than expected, experts caution that deeper data reveals underlying cracks in labor demand, especially as President Donald Trump’s tariff policies create uncertainty for businesses.

June Jobs Data: A Mixed Picture

Economists had anticipated around 117,500 new jobs, but the final number landed nearly 30,000 higher. May’s total was also revised up to 144,000, and April’s was adjusted to 158,000, bringing the three-month average to a solid 150,000 jobs per month.

However, private-sector job growth—excluding the public sector—was relatively weak, adding just 74,000 jobs, the lowest gain since October 2024. Excluding healthcare and education, the increase drops further to just 23,000 jobs, a sign that demand is cooling outside key recession-resistant sectors.

“This is fundamentally a weak report when you strip out public sector gains,” said Samuel Tombs, chief US economist at Pantheon Macroeconomics.

Where the Jobs Were Added

• Healthcare: +58,600

• Leisure and Hospitality: +20,000

• State & Local Government: +80,000 (though economists call this spike likely artificial due to seasonal adjustments)

Federal employment, by contrast, declined by 7,000 jobs.

Labor Force Worries and Wage Trends

While the drop in unemployment is encouraging, it's partly attributed to a shrinking labor force. The labor force participation rate declined, and troublingly, Black unemployment jumped 0.8% to 6.8%, the highest since January 2022.

Average hourly earnings rose 0.2% (8 cents) to $36.30, marking a 3.7% year-over-year increase, down from 3.9% in May.

Hiring Slowdown and Long-Term Unemployment

The labor market continues to show low turnover, with fewer people quitting jobs and hiring activity near 10-year lows. Still, layoffs remain muted, with initial jobless claims falling to 233,000 for the week ending June 28.

Yet, long-term unemployment is creeping up:

• 23.3% of unemployed workers have been jobless for 27 weeks or more

• Continuing claims remain near three-and-a-half-year highs at 1.964 million

Federal Reserve Likely to Stay Cautious

The mixed signals in the labor market will likely keep the Federal Reserve in a holding pattern. Rate cuts remain uncertain as inflation risks persist, particularly if Trump’s tariffs drive prices higher through the supply chain.

“There’s nothing in this report that forces the Fed to cut rates now,” said Daniel Zhao, chief economist at Glassdoor.

Slowing Immigration and Its Impact

One notable trend is a decline in immigration, which could be contributing to the slower growth in the labor force. Economists at Deutsche Bank suggest that the breakeven job growth level—once around 100,000 jobs per month—might now be as low as 50,000, due to an aging population and tighter immigration policy.

That means even modest job growth, like June’s 147,000 figure, could be inflationary if it exceeds the needs of a slower-growing labor force.

Market Reaction

Markets responded positively to the report:

• Dow Jones: +365 points (+0.8%)

• S&P 500: +0.8%

• Nasdaq: +0.9%

Despite solid surface-level numbers, analysts remain cautious as the broader economic picture grows more complex, shaped by fiscal policy, geopolitical tensions, and evolving labor dynamics.