In an unexpected turn, the U.S. labor market added 147,000 jobs in June, outpacing the predicted 110,000 and signaling ongoing economic resilience despite underlying concerns. The unemployment rate also declined slightly, falling to 4.1% from May’s 4.2%, according to the U.S. Department of Labor.
Government and Healthcare Drive Job Growth
While sectors such as federal government, manufacturingy professional services experienced modest declines, state and local government education roles surged with 63,500 new positions. The healthcare and social assistance sector also added a robust 58,600 jobs.
These gains were partly responsible for the net positive surprise in the June jobs report, and helped revise April and May’s numbers upward by a total of 16,000 jobs.
Caution Persists in the Private Sector
Despite the positive headline figures, economists are flagging concerns around private sector hiring. Many firms appear hesitant to bring in new talent or even replace departing staff, reflecting a cautious outlook amid ongoing trade uncertainty and macroeconomic pressures.
According to Schroders, senior economist George Brown believes that companies remain wary of reducing their workforce, given recent labor shortages. “Pockets of this may persist, particularly in states affected by stricter immigration policies,” he noted.
Inflation, Interest Rates, and the Fed’s Next Move
There are still questions surrounding inflationary risks driven by global trade tensions and tariff hikes. While price increases were predicted to accelerate during summer, most analysts still anticipate the Federal Reserve will reduce interest rates by September.
Chair Jerome Powell emphasized a “wait and see” approach, signaling the Fed’s intention to assess the broader inflation landscape before making another cut. The benchmark interest rate has remained within the 4.25%-4.50% range since December 2024.
Trump’s Pressure on the Fed Continues
President Donald Trump again criticized Powell, this time urging him to resign. Posting on Truth Social, he called Powell “Too Late” and demanded his immediate resignation for failing to act sooner on interest rate cuts.
Long-Term Unemployment Sees a Rise
One worrying element in the June report is a rise in long-term unemployment. The number of Americans out of work for 27 weeks or longer grew by 190,000 to a total of 1.6 million, showing that some parts of the labor market still struggle with recovery.
Trade Talks and Tariffs: Business in Limbo
U.S. firms are closely watching ongoing trade negotiations, including a partial deal struck with the United Kingdom. The Trump administration’s 90-day pause on import tax hikes is keeping many companies on edge, as the potential for increased costs looms large.
With new tariffs potentially on the horizon and global inflation risks simmering, businesses are finding themselves caught between growth optimism and economic caution.
