The U.S. labor market continued to show resilience in June, with...
Sam Williamson@SWilliamsonEcon
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Jul 03, 2025
~2 min read
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The U.S. labor market continued to show resilience in June, with employers adding 147K jobs—nearly 40K more than expected. Revisions to March and April added another 16K, lifting the 3-month average to 150K. Unemployment edged down to 4.1%, while labor force participation held steady at 62.3%. With hiring holding steady after a slow start to 2025, a July Fed rate cut looks unlikely and the odds of a move in September have diminished. More details below.
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June job growth was split nearly evenly between service-providing sectors (+68K) and government (+73K), but the underlying story points to cooling momentum in private hiring. Overall services job gains slowed sharply from the 130–140K range seen in April and May, driven by declines in professional and business services and a slowdown in education and health services. Government hiring was concentrated in state (+47K) and local (+33K) education, likely reflecting seasonal patterns tied to the end of the school year. Federal employment continued to decline, though at a slower pace than in April and May.
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Unemployment fell by 222K in June—the sharpest drop since December. The decline was led by a reduction in layoffs and completed temp jobs (-164K), suggesting firms are holding onto workers. Reentrants also declined (-143K), which may reflect some marginal discouragement among job seekers. At the same time, job leavers rose by 121K, possibly indicating growing confidence among those voluntarily exiting roles. Meanwhile, the labor force shrank modestly (-130K). Together, these shifts pushed the unemployment rate down to 4.1%, the lowest since February.
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Homebuilders added a net 5,500 jobs in June, as residential specialty trade contractors gained 6,000 while residential construction shed 500. Despite the slight dip, employment in the sector remains near cyclical highs last seen in July 2007. Specialty contractors are down just 1.2% from their September 2024 peak—underscoring continued strength in homebuilding and suggesting activity is likely to remain robust in the near term.
