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**Strong June Jobs Report Tempers Immediate Fed Rate Cut Expectations**
June’s nonfarm payrolls rose by 147,000, surpassing economists’ expectations of a 110,000 increase and edging out May’s upwardly revised figure of 144,000 (previously reported as 139,000), according to the latest data from the U.S. Bureau of Labor Statistics. The unemployment rate dropped to 4.1%, lower than both the consensus estimate of 4.3% and May’s 4.2%.
Additionally, April and May job gains were revised upward by a combined 16,000, further reinforcing confidence in the labor market’s continued strength.
Average hourly earnings for June climbed 0.2% on the month and 3.7% year over year. The steady wage growth suggests that employers are still facing competition for workers, even as the pace of hiring appears to be moderating. Importantly, this wage growth does not appear to be contributing to inflationary pressures.
The report stands in contrast to weaker private sector hiring data released earlier in the week by ADP, pointing to continued resilience in the labor market despite broader economic headwinds—including tariffs and government job reductions. This divergence has intensified the debate over whether ongoing trade tensions could prompt the Federal Reserve to lower interest rates sooner than expected.
For now, however, the strength of the June data supports the Fed’s current stance of patience. According to the CME FedWatch tool, markets are pricing only a 5% chance of a rate cut at the upcoming July meeting. A September cut remains more likely, with a 74% probability of a quarter-point reduction.
Following the release of the report, U.S. Treasury yields rose sharply. The 10-year yield climbed from 4.28% to 4.35%, as investors moderated expectations for a near-term rate cut.
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