What a difference a day makes.
U.S. employers added a seasonally adjusted 147,000 nonfarm jobs in June and the unemployment rate dipped 10 basis points to 4.1%, according to Thursday’s report released by the U.S. Bureau of Labor Statistics (BLS). Economists polled by Dow Jones had predicted 115,000 job additions and a slightly higher unemployment rate of 4.3%, according to CNBC.
The BLS report comes a day after payroll processing company ADP reported that the private sector shed 33,000 jobs in June, falling well short of analyst predictions of around 100,000 jobs gains.
The odds of the Federal Reserve cutting interest rates in July dipped sharply following the BLS release, according to the CME FedWatch gauge, falling from around 25% Wednesday afternoon to just 5% Thursday morning. The Fed is less likely to cut rates during periods of strong hiring trends.
Unlike the ADP report, the more comprehensive BLS data also includes government jobs. It showed that government employment rose by 73,000 in June, with state governments adding 47,000 jobs — 40,000 of which were in education — while the federal government cut 7,000 positions.
Overall, private employers added 74,000 jobs in June, according to BLS.
Wells Fargo economists Sarah House, Michael Pugliese and Nicole Cervi observed in an analysis that while the June report showed jobs market resiliency, “underneath the surface, the details were less encouraging and generally were consistent with a cooling labor market.”
The Wells Fargo team pointed out that the rise in state and local government education employment may be a seasonal quirk reflecting the “relatively early timing of the survey week capturing employment before schools released for the summer.” They added that the private sector’s 74,000 job gains represent the “smallest increase since last October when hurricanes led to a temporary stalling in job growth.”
First American Senior Economist Sam Williamson commented that while the BLS data signals that “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 added that the better-than-expected employment situation and the likely wait-and-see response from the Fed on rate cuts should have a dampening effect on homebuying trends.
“The housing market has been waiting for a Fed rate-cutting cycle to light the fuse on the 2025 homebuying season, but the labor market’s surprising resilience has extinguished some of that optimism for now” Williamson stated.
