The U.S. labor market added 147,000 jobs in June, offering a modest but positive sign of resilience amid broader economic headwinds. The Bureau of Labor Statistics reported a decline in the unemployment rate to 4.1%, alongside upward revisions to April and May’s job gains. These results outperformed expectations and temporarily eased concerns about a labor slowdown, particularly in the public sector and healthcare.
June’s employment growth was driven largely by hiring in state and local government education, which added 63,500 jobs. Health care and social assistance added another 58,600 positions, followed by smaller gains in leisure, hospitality, and construction. Collectively, public sector roles accounted for half of all new jobs last month.
However, growth outside of those sectors remained weak. Employment declined in federal government, manufacturing, and professional services. Additionally, the number of long-term unemployed workers increased by 190,000, with the share of people jobless for over 15 weeks rising to 38.3%, reversing a downward trend seen over the past six months.
While inflation remains stable and wages continue to rise, small businesses continue to navigate conflicting signals. Private-sector data from ADP revealed a net decline in job creation for the first time in over a year, and manufacturers expressed concerns over unstable pricing and procurement conditions. These trends point to an economy that may be growing, but with significant unevenness.
Uncertainty surrounding trade and tax policy continues to complicate business planning. President Donald Trump has signaled July 9 as the deadline for new trade deals, although administration officials now say that date is flexible. In the meantime, business leaders have voiced frustration over policy unpredictability and its impact on hiring decisions.
Despite the mixed signals, Challenger, Gray & Christmas reported a 19% year-over-year increase in announced hires through June. While this indicates some stabilization, overall hiring remains well below pre-pandemic norms. Without clarity on tariffs and long-term tax policy, small businesses should proceed cautiously when expanding their workforces through the rest of 2025.
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