June US Job Growth Led by Government Amid Manufacturing Decline

The June 2025 U.S. employment report showed a total increase of 147,000 jobs, with government employment accounting for nearly half of this growth, primarily driven by state and local government education positions. Private sector job growth was notably weak, adding only 74,000 jobs, with manufacturing jobs declining for the second consecutive month and retail facing challenges from increased import tariffs under the Trump administration. Despite the headline job gains, the unemployment rate fell slightly to 4.1% partly due to labor force participation declines, and average work hours shortened, signaling underlying economic strains. The surge in government jobs contrasts with a shrinking federal workforce, reflecting President Donald Trump's emphasis on government efficiency. Analysts suggest this mixed report diminishes the likelihood of a Federal Reserve rate cut in July, pushing expectations toward a potential cut in September instead. Overall, the data reveals an economy reliant on public sector employment growth amid subdued private sector performance and tariff-related pressures.