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Investing.com - The U.S. economy added more jobs than anticipated in June, in a sign of ongoing resilience in the labor market despite recent concerns over the impact of sweeping tariffs.
Nonfarm payrolls last month rose by 147,000 from an upwardly-revised 144,000, according to a closely-watched report from the Bureau of Labor Statistics, as job gains in state government and health care were partially offset by declines in the federal workforce. Economists had expected the figure would come in at 111,000.
Meanwhile, the unemployment rate decelerated slightly to 4.1%, cooler than estimates of 4.3%. It registered 4.2% in May.
Average hourly earnings growth also eased to 0.2% on a monthly basis, compared with expectations of 0.3% and May’s pace of 0.4%.
Elsewhere, first-time applications for jobless benefits edged down to 233,000 for the week ended on June 28, while continuing claims were unchanged at 1.964 million.
The numbers come as recent indicators have suggested that, while layoffs have been rare, private employers may be becoming more hesitant to hire and workers were more reluctant to quit during a time of widespread economic uncertainty.
Federal Reserve officials -- who are partly tasked with aiming for maximum employment -- will likely be monitoring the incoming labor market figures, especially as they remain wary of the impact of President Donald Trump’s aggressive trade agenda on the wider economy.
Fed Chair Jerome Powell, who has faced intensifying pressure from Trump to quickly slash rates, has backed a cautious approach to future policy changes, but did say this week that the central bank could bring down borrowing costs at its four remaining policy meetings this year.
That, analysts at Morgan Stanley (NYSE:MS) have noted, would include this month’s gathering, which would be sooner than current market predictions that the next cut will likely come in September.
Powell also suggested at a central bank forum in Portugal this week that, absent Trump’s tariffs, the Fed would have already returned to cutting rates. Instead, the rate-setting Federal Open Market Committee has recently left borrowing costs unchanged at a range of 4.25% to 4.5%.
Powell explained that the Fed "went on hold when we saw the size" of Trump’s levies and assessed economists’ warnings that the duties may drive up inflationary pressures and weigh on the wider economy.
Since Trump’s announcement of punishing -- and now delayed -- "reciprocal" tariffs in April, price gains have stayed relatively muted, though worries remain that the impact of the tariffs will be more deeply felt in the coming months.
In a note, analysts at Vital Knowledge said the higher-than-projected jobs number will have investors feeling "a tiny bit better about the state of growth compared to the last few days." But, given how these fears have contributed to a narrative that the Fed may shortly move to reduce rates, "the knee-jerk reaction" to the relatively strong labor market data "will be hawkish," they added.
"[A]lthough no one at the Fed is likely thinking about the world any differently" after reviewing the data, they argued.