Jobs report June 2025

Job growth in June exceeded expectations, with government hiring playing a significant role in boosting the labor market. This strong performance likely takes a July interest rate cut off the table, according to the Bureau of Labor Statistics.

Nonfarm payrolls rose by 147,000 in June, surpassing the estimated 110,000 and slightly above the upwardly revised 144,000 in May. The unemployment rate also dropped to 4.1%, the lowest since February, contrary to the forecast of a slight increase to 4.3%. The more comprehensive unemployment rate, which includes discouraged workers and those in part-time positions for economic reasons, decreased to 7.7%, the lowest since January.

However, the decrease in the jobless rates was mainly due to a decline in the number of people working or actively seeking employment. The labor force participation rate fell to 62.3%, the lowest since late 2022, with an increase of 329,000 individuals not counted in the labor force.

Stocks rose following the report, and Treasury yields saw a sharp increase in anticipation of the Independence Day holiday in the U.S. The solid job gains in June, combined with a decline in the unemployment rate, suggest that the labor market remains resilient and diminishes the likelihood of a July rate cut.

Average hourly earnings rose by 0.2% in June and 3.7% from a year ago, indicating minimal upward pressure on wage-related inflation. Government hiring saw a significant increase of 73,000, driven by gains in state and local positions, particularly in education-related jobs. Health care added approximately 39,000 jobs, while social assistance contributed about 19,000.

Construction saw an increase of 15,000 jobs, while manufacturing lost 7,000. Most other sectors experienced little change in employment figures. The overall job market in the U.S. remains robust, with signs of a slowing labor market and muted inflation from President Trump’s tariffs.

Market expectations for a July rate cut have significantly decreased following the strong payrolls report, with traders now seeing the likelihood of a cut at 4.7%, down from 23.8% the previous day. The market expects the next rate reduction to occur in September, with reduced expectations for a total of three cuts this year.

The labor market report is closely watched as the Federal Reserve evaluates its monetary policy direction. President Trump has been vocal about his desire for lower interest rates, while Fed Chair Jerome Powell has maintained a cautious approach. The strength of the U.S. economy allows the Fed time to assess incoming data before making any policy decisions.

In conclusion, the June job report indicates a resilient labor market with strong job gains and a decrease in the unemployment rate. The overall outlook remains positive, with the possibility of a rate cut in July now less likely. The market continues to monitor economic indicators and Fed policy statements for future guidance.