U.S. payrolls increased by 147,000 in June, more than expected

Job growth proved better than expected in June, as the labor market showed surprising resilience and likely taking a July interest rate cut off the table.

Nonfarm payrolls increased a seasonally adjusted 147,000 for the month, higher than the estimate for 110,000 and just above the upwardly revised 144,000 in May, the Bureau of Labor Statistics reported Thursday. April’s tally also saw a small upward revision, now at 158,000 following an 11,000 increase.

The unemployment rate fell to 4.1%, the lowest since February and against a forecast for a slight increase to 4.3%. A more encompassing rate that includes discouraged workers and those holding part-time positions for economic reasons edged down to 7.7%.

Though the jobless rates fell, it was due largely to a decrease in those working or looking for jobs. The labor force participation rate fell to 62.3%, its lowest level since late 2022 as the labor force, owing to an increase of 329,000 of those not counted in the labor force. The household survey, which is used to calculate the unemployment rate, showed a smaller gain of just 93,000.

Stock market futures held positive following the report while Treasury yields rose sharply in a trading session that will end early ahead of the Independence Day holiday in the U.S.

“The solid June jobs report confirms that the labor market remains resolute and slams the door shut on a July rate cut,” said Jeff Schulze, head of economic and market strategy at ClearBridge Investments. “Today’s good news should be treated as such by the markets, with equities rising despite the accompanying pickup in interest rates.”

Along with the solid payroll gains and fall in the unemployment rate, average hourly earnings increased 0.2% for the month and 3.7% from a year ago. The average work week moved slightly lower to 34.2 hours.

Government employment posted a large gain, leading all categories with an increase of 73,000 due to solid boosts in state and local hiring, particularly in education-related jobs. Federal government, which is still feeling the impact of cuts from Elon Musk’s Department of Government Efficiency, lost 7,000.

In addition, health care again was strong, adding 39,000, while social assistance contributed 19,000.