June jobs report: Better than expectations

Jul 3, 2025

The U.S. economy showed surprising strength in June, adding 147,000 jobs and lowering the unemployment rate to 4.1%. However, much of this increase came from government employment, raising questions about private sector growth. Insightful discussions revolve around the Federal Reserve's potential rate cuts and how current economic data influences these decisions. The podcast also touches on the challenges posed by trade policy and its effects on consumer spending, making for a comprehensive look at the evolving financial landscape.

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INSIGHT

Jobs Growth Masks Private Slowdown

The headline jobs growth was strong but half of the increase came from government jobs, not private sector growth.
Private sector activity is moderating, indicated by slower private job growth and reduced average work week.

INSIGHT

Fed Rate Cuts Hinged On Data

Rate cuts depend on seeing CPI data that shows limited tariff price pass-through and more labor market softening.
The Fed is likely to wait for more data before cutting rates, possibly targeting September or November.

INSIGHT

Fed Divisions Favor Patience

Only two Fed members, Bowman and Waller, advocate for early rate cuts currently.
Most of the committee, including Powell, prefer a patient approach based on incoming data.

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The U.S. economy added 147,000 jobs in June, roundly beating market expectations. But while the headline numbers seem strong at first glance, much of the increase was attributed to government employment, with private payroll growth showing some moderation. What do these mixed signals mean in the context of the wider economy? And is J.P. Morgan Research adjusting its forecast for rate cuts as a result? Join chief U.S. economist Michael Feroli and Alexa Hanelin from the U.S. Rates Sales team as they discuss the state of the labor market. 

This episode was recorded on July 3, 2025.

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