June’s job gains exceeded economists’ expectations, who had predicted about 106,000 new roles and a rise in the unemployment rate. This marked an increase from May’s revised addition of 144,000 jobs. So far in 2025, monthly job growth has averaged 124,000 positions. This is lower than the strong gains of 2021 through 2023 but still signals a resilient labor market.
“Potential homebuyers are likely to remain cautious unless, and until, the job market begins to improve again, or mortgage rates drop sufficiently to spur more activity,” Fratantoni said.
State and health care sectors drive gains
Hiring was especially strong in state governments and healthcare. Government payrolls increased by 73,000, with state government education alone accounting for 40,000 new jobs. Local government education roles also continued to trend higher, adding 23,000 positions.
“Job growth came in at 147,000 in June, in line with the average pace for the last 12 months,” Fratantoni noted. “However, half of these job gains were in state and local government, leaving private sector job gains at 74,000, at half their pace of recent months. Looking within the private sector, effectively all these new jobs were in education, health care, and hospitality. Recent data also show that job openings are up in these sectors.
“The unemployment rate dropped back to 4.1%, but this was the result of more individuals leaving the labor force rather than gaining employment, as the labor force participation rate dropped again.”