This morning, the Bureau of Labor Statistics reported that U.S. employers added 147,000 nonfarm payroll jobs in June, surpassing economists’ forecasts.
June marked the fourth straight month of job growth that beat expectations, following May’s gain of 139,000. Revisions to earlier months were mixed but nudged the totals slightly higher overall.
“The U.S. labour market continues to signal encouraging signs of life and more resilience than expected at this point about three months since the April 2 tariff shock,” noted BMO‘s Scott Anderson.
Despite the upside surprise, June’s job growth wasn’t far off trend. The 147,000 positions added were nearly in line with the 12-month average of 146,000, according to the BLS.
The U.S. unemployment rate held steady at 4.1% in June, with 7.0 million people out of work.
Meanwhile, the labour force participation rate edged down to 62.3%, while the employment-to-population ratio held steady at 59.7%.
Job gains were concentrated in government (+73,000), healthcare (+39,000) and social assistance (+19,000). Employment in most other major industries saw little change.
Federal government employment continued to decline, with 7,000 positions lost in June. That brings total losses to 69,000 since the January peak.
Wages also edged higher in June, with average hourly earnings up 0.2%—or eight cents—to $36.30. Compared to a year ago, wages have risen 3.7%.
“While weakness in the household survey coupled with the significant downward revisions to prior months helped to take some of the shine off the headline payrolls print, it’s fair to say that the labor market is holding up better than expected,” wrote TD’s Thomas Feltmate.
Bond yields moved higher on the news, with the U.S. 10-year Treasury up more than 3.5 basis points to 4.33%, while Canada’s 5-year yield—closely tied to fixed mortgage rates—climbed 2 basis points to 2.94%.
Sticky inflation and global risks keep Fed in wait-and-see mode
Although June marked another stronger-than-expected jobs report, economists say it’s unlikely to prompt the Federal Reserve to cut rates any time soon.
Scotiabank’s Derek Holt says the report is just one of many data points the Fed will need to weigh before making its next move.
“I think the Federal Reserve will require more evidence than one month’s payrolls report and lots more evidence on the inflation readings,” he wrote, noting the Fed’s data-driven approach means any shift will take time.
TD’s Feltmate also pointed to trade uncertainty and stubborn inflation as reasons for the Fed’s caution.
“Heightened uncertainty surrounding trade and fiscal policy alongside still elevated inflation has left policymakers in no rush to cut rates,” he said. “While the labor market is showing signs of cooling, job creation is still running at a healthy pace and underscores the ongoing need for patience.”
BMO’s Anderson said the report showed continued resilience in the U.S. labour market, but added that it does little to shift the outlook for rate cuts.
“There is nothing in the June report to force the Fed off the sidelines at the July FOMC meeting and the chance of a September cut has declined a bit,” he noted, adding that markets are now pricing in a 73.1% chance of a September rate cut, down from 91% the day before.
As for the Bank of Canada, Feltmate says the Bank will take the latest U.S. jobs data in stride as it continues weighing signs of softening growth against persistent inflation pressures at home.
While the BoC held its policy rate at 2.75% in June, Feltmate believes the case for a rate cut in July is building. “With Canada’s labour market showing cracks, consumers reigning in spending, and the housing market visibly strained, we think the BoC has headroom to cut the policy rate two more times this year,” he wrote.
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Last modified: July 3, 2025