June Jobs Report Surges Past Expectations — But It May Delay a Fed Rate Cut

June Jobs Report Surges Past Expectations — But It May Delay a Fed Rate Cut

The U.S. economy added 147,000 jobs in June 2025, beating the Wall Street Journal’s forecast of 110,000 and signaling a labor market that remains more resilient than expected. The unemployment rate dipped to 4.1% from May’s 4.2%, and revisions to April and May figures added another 16,000 jobs to previous estimates. But while this is good news for job seekers and investors, it complicates things for the Federal Reserve.

Health Care and Local Governments Lead the Way

June’s growth was largely driven by health care—a sector known for its stability—and increased hiring by state and local governments. Together, these public-sector gains helped offset a decline of 7,000 jobs at the federal level. In total, government employment rose by 73,000 jobs during the month.

Markets Rally, But Fed Outlook Shifts

Investors responded enthusiastically. The Dow Jones surged 344 points, coming within 200 points of its all-time high. The S&P 500 and Nasdaq also extended their record-breaking runs, closing at 6,279 and 20,601, respectively.

But the jobs report may cause the Federal Reserve to hit pause on an anticipated interest rate cut. As Chris Zaccarelli of Northlight Asset Management explained, “Given the strong jobs numbers… the Fed is much less likely to cut rates this month.” Instead, rate adjustments may be delayed until later in the third or even fourth quarter of the year.

The Trump Administration’s Take

White House Press Secretary Karoline Leavitt was quick to tout the report, emphasizing that this is the fourth straight month job numbers exceeded expectations. According to the administration, all job gains since February—the first full month of Trump’s second term—have gone to U.S.-born workers, while foreign-born employment fell by over 500,000.

This marks the sharpest drop in foreign-born employment for a February-to-June period since 2009. Officials credit Trump’s immigration crackdown and domestic-first hiring policies. “The economy is BOOMING again,” Leavitt said on X. A White House spokesperson also emphasized that Trump’s deregulation efforts, energy policies, and “One, Big Beautiful Bill” are behind the growth.

Political Tension with the Fed

Despite the strong numbers, Trump remains critical of Federal Reserve Chair Jerome Powell, calling him “too late” for being overly cautious about rate cuts. Trump has argued that rates should be 2 to 3 points lower and claims the Fed’s stance is politically motivated.

The Fed has declined to comment.

Investor Focus Shifts to Earnings

With the Fed potentially holding steady on interest rates, analysts say attention is now turning to corporate earnings. The earnings season kicks off July 15, and valuations are already high. Zaccarelli noted that the market is trading at 22 times earnings—well above the 30-year average of 17. That, coupled with most positive economic news already priced into the market, means investors should brace for volatility if earnings disappoint.

Conclusion

The June jobs report paints a picture of an economy on the rebound—but that same strength may push off the monetary relief many expected from the Fed. With politics, markets, and rate policy all intersecting, July is shaping up to be a defining month for economic strategy in Trump’s second term.