Jobs report shows resilience as unemployment falls
The June jobs report 2025 has revealed unexpected strength in the US labour market, defying economist predictions and casting doubt over an imminent interest rate cut from the Federal Reserve. The jobs report today showed the economy added 147,000 nonfarm payrolls in June, surpassing forecasts of 106,000. The unemployment rate dropped to 4.1%, a better result than the anticipated rise to 4.3%.
This month’s gains slightly outpaced the upwardly revised 144,000 jobs added in May, signalling ongoing momentum. The Bureau of Labor Statistics also revised April’s number to 158,000. Despite the overall positive trend, the labour force participation rate declined to 62.3%, the lowest since late 2022.
The June jobs report 2025 showed the US added 147,000 jobs and unemployment fell to 4.1%.
Government and healthcare sectors lead gains
Government jobs led the charge, contributing 73,000 new positions. State and local governments drove this surge, particularly in education. However, the federal government shed 7,000 jobs, partly due to ongoing cuts from the Department of Government Efficiency.
Healthcare also performed well, adding 39,000 jobs, followed by the social assistance sector with 19,000. These sectors played a key role in bolstering the labour market in June.
Average hourly earnings rose 0.2% for the month and 3.7% year-on-year, slightly below expectations. Economists had predicted a 0.3% monthly increase and a 3.8% annual rise. The average workweek edged down to 34.2 hours.
Forex factory reacts as rate cut bets cool
Market reactions were swift. Stock futures remained positive, but Treasury yields rose sharply following the release of the june jobs report. Traders adjusted their expectations for interest rate changes, with the CME FedWatch Tool showing the probability of a July rate cut plummeting to just 4.7%, down from nearly 24% the previous day.
The odds for a September rate cut also dipped, now standing at 78% compared to 94% earlier in the week. Market participants are now leaning towards the Federal Reserve implementing only two cuts this year instead of the previously expected three.
Labour market shows mixed signals
While June’s jobs report appears strong, other recent indicators suggest softening. ADP’s data on Wednesday revealed private employers cut 33,000 jobs in June — the first monthly loss since March 2023. Continuing unemployment benefit claims also hit a four-year high.
The May Job Openings and Labor Turnover Survey (JOLTS) reported job openings at their highest since November 2024. However, hiring and quits rates remain near decade lows, indicating cautious sentiment among workers and employers.
Nela Richardson, ADP’s chief economist, acknowledged a slowdown in hiring momentum during a media call but cautioned against assuming a steady decline in jobs for the rest of the year.
Political pressure and Fed response
US President Donald Trump has increased pressure on the Federal Reserve to lower rates. On Wednesday, he demanded Jerome Powell’s resignation via Truth Social, criticising the central bank’s cautious approach.
Powell responded indirectly during a public appearance on Tuesday, noting that all upcoming meetings are potential opportunities for policy moves, but the current economic strength allows the Fed to take time in assessing data before acting.
Outlook for interest rates and markets
The forex factory and other financial platforms closely tracked the shift in market sentiment following the report. The unexpectedly strong jobs report today has pushed a July rate cut nearly off the table. Traders are now eyeing September for a possible move, though that likelihood has weakened as well.
With the US economy continuing to show strength in some sectors despite headwinds in others, investors remain cautious. Wage growth, labour participation, and employment figures will play a critical role in shaping the Fed’s next steps.
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Final thoughts
The June jobs report highlights the complexities of the current US labour market. While job creation remains healthy and the unemployment rate has fallen, softer wage growth and declining participation raise questions about long-term trends.
As central banks worldwide navigate inflation and interest rate pressures, the strength of reports like this one adds to the balancing act. The market will continue to monitor upcoming data releases for clearer signals on the direction of both the economy and monetary policy.
