US employers added 147,000 jobs in June, surpassing consensus forecasts and matching the 12-month hiring average, according to new data from the Bureau of Labor Statistics. However, the report shows a growing divide between public and private sector job creation — a sign the labour market is losing momentum beneath the surface.
The unemployment rate edged down to 4.1% from 4.2% in May. This small decline partly reflects a reduction in labour-force participation, which remains stagnant at 62.3%. Nearly half of June’s total job gains came from government hiring, driven by a seasonal jump in state-education roles. The private sector added just 74,000 jobs — its weakest performance since October 2024 — as manufacturing and professional and business services each shed 7,000 positions. Healthcare remained a bright spot, adding 39,000 roles.
Wage growth also moderated, with average hourly earnings rising 0.2% month-on-month, or 3.7% annually, to $36.30. The average workweek edged down to 34.2 hours, further evidence of softer demand for labour.
Alternative data highlighted additional weakness. The ADP National Employment Report showed a 33,000 drop in private payrolls in June, marking the first monthly decline in more than two years. Economists pointed to a mix of factors dampening private-sector hiring, including elevated tariffs, stricter immigration enforcement, and ongoing fiscal restraint in President Trump’s second term.
“Labour market conditions remain tight, but we are clearly seeing a cooling trend,” said Atlanta Fed President Raphael Bostic. “Wage growth is slowing, hours worked are slipping, and employers are more cautious about new hires.”
Markets responded positively to the headline figures, with the S&P 500 closing at a new record high and Treasury yields firming. Investors viewed the data as “good enough” to support the case for a Federal Reserve rate cut, but not until September at the earliest, given persistent core inflation.
Looking ahead, most forecasters expect US unemployment to drift towards 4.5%–5% by mid-2026. Payroll growth is expected to slow to fewer than 50,000 jobs per month later this year before gradually recovering. Structural forces such as an ageing workforce, AI adoption, and shifts in trade policy will continue to shape the landscape.
