Private Sector Weakens Despite Strong U.S. Job Growth

The U.S. economy demonstrated unexpected job market growth in June yet private sector performance showed ongoing weaknesses. The Labor Department announced a 147,000 increase in nonfarm payrolls which government employment accounted for with 73,000 new positions. Private employers created only 74,000 new positions during this period which marked the lowest rate since October 2024.

The unemployment rate decreased to 4.1% from 4.2% in May because people stopped participating in the labor force. The decrease in average weekly hours indicates that companies are reducing their labor expenses because of increasing economic difficulties.

Healthcare and social assistance services led private job creation by adding 58,000 positions together. The manufacturing and retail industries showed weak hiring activity because businesses encountered increasing difficulties from the Trump administration's extensive import tariffs.

Eugenio Aleman from Raymond James observed that private sector weakness extended across all industries which could impact future Federal Reserve decisions. The government employment numbers increased because of seasonal education hiring but federal positions decreased by 7,000. The positive payroll numbers in June do not hide the ongoing decline of private sector employment which suggests that high interest rates and political instability will reduce labor market demand.