The latest U.S. Bureau of Labor Statistics (BLS) jobs report suggests that the U.S. labor market continued its impressive stretch of strength and resiliency into June 2025, despite continued economic uncertainty.
Leading up to the jobs report’s release, analysts’ expectations pointed toward relatively modest employment gains. This belief was reinforced by the most recent ADP National Employment Report, which found that private-sector employment fell by 33,000 jobs in June 2025. Although the most recent BLS jobs report does contain some red flags, including highly uneven job growth across sectors, the U.S. labor market continues to beat expectations in an uncertain economic environment.
Employment Growth Exceeds Expectations
Total nonfarm employment increased by 147,000 jobs in June 2025, significantly above consensus estimates of increases ranging from 75,000 to 115,000. Furthermore, after months of downward revisions pointing to slowing job growth in 2025, total nonfarm payroll gains for April and May were revised upward by a total of 16,000 jobs. As a result of these updates, total nonfarm employment has increased by an average of 151,000 jobs each month during the most recent 12-month period. Although there is still evidence that the labor market has cooled in 2025, this latest report underscores that overall employment growth remains remarkably resilient during a period of economic uncertainty.
While overall employment growth beat expectations, job gains were not evenly distributed across industries, with June data showing signs that private-sector employment gains are starting to slow (increasing by 74,000 in June versus 137,000 in May 2025). Total nonfarm employment grew in 13 out of 21 major industries, with government (up 73,000) and health and social assistance (up 58,000) accounting for nearly 90% of the job gains. Strong employment growth in the government sector was driven by state and local gains, which in turn were driven by job gains in public education (up 63,500). While impressive, gains in public education employment are common at this time of year because state and local education agencies tend to hire in advance of the upcoming academic year. Hiring also increased notably in arts, entertainment, and recreation (up 15,100) and construction (up 15,000), with the former number likely reflecting hiring associated with the summer tourist season.
Despite these gains, growth was very modest in several other sectors, and employment fell in eight industries. Private education services (down 7,500); professional, scientific, and technical services (down 7,400); and wholesale trade (down 6,600) were the three largest losers, and total manufacturing employment declined by 7,000 (down 5,000 in durable goods and 2,000 in nondurable goods).
Unemployment Rate Falls
Prior to the release of the BLS jobs report, analysts had expected the unemployment rate to rise slightly; however, both the U3 (i.e., the traditional unemployment rate) and U6 rates ticked downward in June to 4.1% and 7.7%, respectively. Both measures continue to be low by historical standards, but the number of discouraged workers increased by 256,000 in June, consistent with recent consumer sentiment surveys. These results show that job seekers are having greater difficulty finding employment.
The U3 rate tracks the share of labor force participants who are jobless but able to work and actively seeking employment. The U6 rate includes people who are marginally attached to the workforce and those working part time for economic reasons (in addition to the set of unemployed people captured in the U3 rate).
Wage Growth Continues to Fall
The growth rate in year-over-year average hourly earnings continued to decline, with revisions to the monthly data revealing wage growth gradually declined in the first six months of 2025. As of June 2025, year-over-year growth in average hourly earnings stood at 3.7%, one of the lowest levels observed over the last 12 months. Gradually declining wage growth continues to reinforce evidence of a softening labor market, a welcome sign for employers concerned about rising labor costs.
Labor Shortage Persists
Month-to-month job openings unexpectedly increased by 374,000 in May, and the unemployed-per-job-opening ratio (UJOR) ticked downward. According to the most recent data, there were 532,000 more job openings than unemployed people in May, reinforcing that an overall labor shortage persists in the U.S. labor market. Even so, the latest Job Openings and Labor Turnover Survey (JOLTS) report also reinforced mounting evidence of a hiring slowdown, with the hiring rate falling to 3.2% in May. This rate is relatively low by historical standards, suggesting that significant barriers may exist in matching job seekers with open positions.
The UJOR is the ratio of the unemployed population (i.e., people without a job who are able to work and actively looking for employment) to the number of open jobs at a given point in time. When the value of this ratio is below 1, it means that even if every unemployed person could be immediately matched to an open job, there would still be unfilled positions. These conditions indicate a labor shortage in the overall labor market, though it is worth noting that other labor market frictions (e.g., skills mismatches between job seekers and open positions) can create a labor shortage even when the UJOR is above 1.
What Do These Findings Mean for You?
The latest BLS jobs report suggests that the labor market continues to defy expectations in the face of economic headwinds, though employment gains continue to be concentrated in certain sectors and hiring has appeared to slow significantly.
Heightened uncertainty over the magnitude and economic impact of changes to regulatory policies, federal workforce cuts, and potential inflationary effects of significant changes to trade policies will likely come into sharper focus in the coming months.
The June 2025 jobs report is unlikely to change the Federal Reserve Board’s stance on monetary policy because the stronger-than-expected jobs report provides them with evidence they can continue to hold interest rates within the 4.25% to 4.5% range for now.
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