Wanted to catch up to
the most recent US jobs report, as that's been an area which is still holding up as other parts of the economy are sputtering.
Job growth proved better than expected in June, boosted by government hiring, as the labor market showed surprising resilience and likely took a July interest rate cut off the table.
Nonfarm payrolls increased a seasonally adjusted 147,000 for the month, higher than the estimate for 110,000 and just above the upwardly revised 144,000 in May, the Bureau of Labor Statistics reported Thursday. April’s tally also saw a small upward revision, now at 158,000 following an 11,000 increase.
The unemployment rate fell to 4.1%, the lowest since February and against a forecast for a slight increase to 4.3%. A more encompassing rate that includes discouraged workers and those holding part-time positions for economic reasons edged down to 7.7%, the lowest since January.
But note the "boosted by government hiring" part of that story. When you take a look
inside the numbers, I'm not so sure job growth was that good at all last month.
Government employment rose by 73,000 in June. Employment in state government increased by
47,000, largely in education (+40,000). Employment in local government education continued to trend up (+23,000). Job losses continued in federal government (-7,000), where employment is down by 69,000 since reaching a recent peak in January.
Health care added 39,000 jobs in June, similar to the average monthly gain of 43,000 over the prior 12 months. In June, job gains occurred in hospitals (+16,000) and in nursing and residential care facilities (+14,000).
In June, social assistance employment continued to trend up (+19,000), reflecting continued growth in individual and family services (+16,000).
So nearly half of the job growth last month was in government jobs, mostly state colleges that weren't having as many seasonal layoffs (so a seasonally-adjusted gain), and local teaching jobs that may also not be reflecting the end of the school year. Let's see if that has a reflexive decline next month.
If you look at it a different way, private sector job growth was only 74,000, the lowest in 8 months, and all but 16,000 of that was in health care and social assistance. That's not an overall good payrolls report to me, and it continues a trend of moderation in growth for that part of the jobs market.
The decline in the unemployment rate to 4.1% had less to do with more Americans finding jobs (+93,000 employed) and more to do with the labor force going down by 130,000.
As
UW-Madison professor Menzie Chinn notes, the
ADP payrolls report was negative for June, and the small increase in the household survery still leaves the total amount of Americans listed as "employed" in that survey more than 500,000 below where it was at the start of 2025.
And yes, the household survey is smaller and often has more noise and fluctuation to it. And while the continued downward drift is concerning in that number, Professor Chinn says that we usually see payrolls also start to fall when a real recession begins.
In real time, the household series turns one month earlier than the establishment in two cases (2001, 2007), and twice the turning points are the same time (1990 and 2020). In the revisions, the civilian series peaks are moved earlier once (1990), and later by two months (2001). The NFP peak is moved later once (2001 recession).
Payrolls aren't falling yet in the BLS reports. And I don't think the Trump Administration is juicing the numbers in these repors because
Trump keeps rambling about how interest rates should be lowered, and decent jobs reports are an argument
against that.
We have yet to see a notable jump in jobless claims for July, and total unemployment claims have yet to reach 2 million. So based on that, we're still in a slow growth scenario for jobs, even if most spending data seems to indicate things are not going well, and that's before tariff-affected price increases become more widespread as those products hit the shelves.
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