- Despite federal cuts, hiring in the U.S. sped up last month with 147,000 jobs added, while the unemployment rate ticked down to 4.1%. “This is equilibrium,” one economist said.
Employers sped up hiring in the U.S. last month, defying federal job cuts, tariff threats, and a fog of bad vibes to create 147,000 new jobs, the Labor Department reported Thursday. The unemployment rate ticked down to 4.1%.
Economists were expecting about 120,000 jobs to be created last month, but were prepared for worse after a private payrolls report Wednesday showed an unexpected contraction.
Hiring in health care, state government, and public education led the gains. Federal employment fell by 7,000 last month and is down 69,000 since January, spurred by President Donald Trump’s efforts to slash the administrative state. (Workers who have taken buyouts or whose employment is being litigated in the courts are counted as employed in the survey.)
“Uncertainty around tariffs and trade have apparently not spooked businesses into shedding workers,” Jeffrey Roach, chief economist at LPL Financial, said in a note.
Wage growth slowed last month, with average hourly earnings increasing at a 3.7% annual rate, and wages for the roughly 80% of the workforce who aren’t managers growing 3.9%.
While good news for workers, June’s strong hiring lessens the chance the Federal Reserve will cut interest rates at its next policy meeting. Trump has been pressuring Fed Chair Jerome Powell to cut rates.
“If businesses keep expanding payrolls like they’ve done so far this year, the Fed can comfortably sit in ‘wait and see’ mode at the upcoming policy meeting,” Roach said.
Still, the U.S. job market has cooled considerably from red-hot days of 2021-2023 when companies were desperate for workers. So far this year, employers have added an average of 124,000 jobs a month, down from 168,000 in 2024 and an average of 400,000 from 2021 through 2023.
“The job market has moved sideways for the last six months,” Eric Winograd, chief U.S. economist at AllianceBernstein, told Fortune this week, prior to the report’s release. “The unemployment rate has sat between 4% and 4.25% for the last half year. This is equilibrium.”
There’s “a low unemployment rate, a steady pace of hiring, wage pressures that are abating, and weekly hours that are consistent,” he added.
Still, Friday’s report indicates some underlying strain, with workers taking longer to find jobs if they have been laid off. The number of the long-term unemployed jumped by 190,000 last month, and the number of people not working who wanted to—but weren’t counted as unemployed in the formal tally—rose 234,000.
And the overhang of Trump’s tariffs—plus their erratic rollout, with levies announced one day and suspended the next—has left businesses bewildered and frustrated.
Manufacturers responding to a survey released this week by the Institute for Supply Management complained they and their customers were reluctant to make decisions for as long as Trump’s tariffs were unpredictable.
“That whiplash has to stop and it has to stay stopped,” said Susan Spence, chair of the ISM’s manufacturing survey committee.
The Associated Press contributed reporting.