The U.S. labor market continues to defy expectations, adding 147,000 new jobs in June, while the unemployment rate remained stable at 4.1%, according to the U.S. Bureau of Labor Statistics.
The strongest job gains were in state government and health care, while the federal government continued to lose jobs.
As of the end of the month there were about 7 million people unemployed, basically flat compared with May.
The unemployment rate has remained in a narrow range of 4% to 4.2% since May 2024, the BLS notes.
In June, the number of long-term unemployed (those jobless for 27 weeks or more) increased by 190,000 to 1.6 million, largely offsetting a decrease in the prior month. The long-term unemployed accounted for 23.3% of all unemployed people.
The labor force participation rate changed little at 62.3% while the employment-population ratio held at 59.7%.
Wages continued to inch up slowly: The average hourly wage for all employees on private nonfarm payrolls rose by 8 cents, or 0.2%, to $36.30 in June.
Over the past 12 months, average hourly earnings have increased by 3.7%.
In June, average hourly earnings of private-sector production and nonsupervisory employees rose by 9 cents, or 0.3%, to $31.24.
“The U.S. labor market offered a pre-Fourth of July surprise, generating 147,000 jobs, nearly 40,000 more jobs than consensus estimates expected, and demonstrating continued resilience,” says Sam Williamson, senior economist for First American, in a statement.
“While the June pop in jobs, combined with upward revisions to March and April reports, signal hiring has stabilized following a sluggish start to 2025, it means July will be a dud, with a Fed rate cut unlikely and dropping the odds for a move in September,” Williamson says. “The housing market has been waiting for a Fed rate-cutting cycle to light the fuse on the 2025 home-buying season, but the labor market’s surprising resilience has extinguished some of that optimism for now.”
In a separate statement, Mike Fratantoni, senior vice president and chief economist for the Mortgage Bankers Association, notes that “half of these job gains were in state and local government, leaving private sector job gains at 74,000, at half their pace of recent months.”
“Looking within the private sector, effectively all these new jobs were in education, health care, and hospitality,” Fratantoni says. “Recent data also show that job openings are up in these sectors.”
“The unemployment rate dropped back to 4.1 percent, but this was the result of more individuals leaving the labor force rather than gaining employment, as the labor force participation rate dropped again,” he says. “Wage growth slowed again in June to a 3.7 percent rate over the last 12 months. Taken together, these data indicate a job market that is holding up reasonably well given the uncertainties facing this economy. While there are certainly some signs of softening in the private sector, the report is likely to keep the Federal Reserve on hold for now. MBA is still forecasting two cuts from the Fed this year.”
“Potential homebuyers are likely to remain cautious unless, and until, the job market begins to improve again, or mortgage rates drop sufficiently to spur more activity,” Fratantoni adds.
Photo: Marten Bjork