The US labour market continued to expand in June, contrary to expectations of a deceleration in hiring as investors became increasingly sceptical about trade policy and immigration enforcement. The Labor Department reported that employers added 147,000 workers in June, surpassing the 110,000 forecast by economists surveyed by The Wall Street Journal. The jobless rate fell to 4.1%, from 4.2% in May.
Revised figures showed stronger April and May hiring, with combined 16,000-job upward revisions. Most of the jobs added in June were concentrated in state and local government—particularly education—and in health care.
The report was greeted with enthusiasm from the stock market, as the S&P 500 and Nasdaq Composite made new all-time highs. The data was interpreted by investors as evidence that the economy remains robust despite the disruptions induced by tariffs and immigration enforcement. The Federal Reserve is likely to refrain from cutting interest rates.
But underlying weaknesses tempered the optimists. Private employers generated only 74,000 jobs, down dramatically from 137,000 in May and the lowest since October 2024, when hurricanes Helene and Milton devastated employment. Manufacturing, professional services, and business services reported no expansion or decline, with federal-government hiring dropping by 7,000 jobs.
"The headline number exaggerates the underlying trend in employment creation," stated KKR investment firm global macro and asset allocation head Henry McVey. He went on to say that the continuing decline of manufacturing employment signals a recession in the industry.
President Trump responded to the figures in a positive light, crediting the economic prosperity to the tariff approach. "The economy is BOOMING once more and will get better and better when the One, Big Beautiful Bill is signed and enacted!" White House press secretary Karoline Leavitt posted.
However, stress signs are mounting. US manufacturing slowed for the fourth consecutive month in June, a survey by the Institute for Supply Management reported. Companies with significant exposure to European markets are also reporting diminishing job openings, a Goldman Sachs report discovered.
Meanwhile, companies themselves are getting more cautious, with many at "no hire, no fire" holding out for immigration clarity, tariff clarity, and tax policy clarity. Inflation, though high, remains below fevered concern levels.
One of the industries hardest hit by immigration policy is leisure and hospitality, where job growth slowed. Sung Won Sohn, an economics and finance professor at Loyola Marymount University, credited the slowdown with the Trump administration's anti-immigration efforts.
That cracking down can be discouraging immigrants from securing work. The labour force participation rate fell to 62.3% in June, a post-2022 record low. Morgan Stanley analysts noted the rate for foreign-born employees fell to 66.3% from 67.3% in the prior year. For native-born employees, the participation fell to 61.8% from 62.1%.
A collaborative report by the Brookings Institution and the American Enterprise Institute foresaw net immigration for 2025 dropping to zero or going negative. Consequently, they project that the US can possibly need to create between 10,000 to 40,000 jobs in the latter half of the year in order to achieve its current unemployment rate.
While June's job headline news was positive, the conflicting signals in the data indicate a labour market buckling under structural issues—reducing immigration to declining sector-specific slumps—against the background of an uncertain policy climate.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
