US Payroll Growth Beats Forecasts, Jobless Rate Drops To 4.1%

US job growth exceeded expectations in June for a fourth straight month and the unemployment rate fell, showcasing a labor market that is holding up despite a slowing economy. 

Payrolls increased 147,000 last month, driven by a jump in state and local government employment, according to a Bureau of Labor Statistics report out Thursday, a day early because of the Independence Day holiday. The unemployment rate fell to 4.1%.

Private payrolls rose just 74,000 in June, the least since October and largely due to health care. The figures are consistent with a moderation in hiring as employers grapple with President Donald Trump’s erratic trade policy and await congressional approval of his signature tax legislation. Despite slower economic activity and escalating uncertainty in the first half of the year, businesses have largely been reluctant to reduce headcount.

The jobs data will also help shape the debate among Federal Reserve officials over when to resume lowering interest rates. Fed Chair Jerome Powell has said there is no rush to reduce borrowing costs until there is more clarity about the impact of tariffs on inflation. Price pressures have been subdued so far this year.

Powell recently told lawmakers that if the labor market were to meaningfully weaken, it would be possible to cut rates sooner than expected.