The U.S. economy added 147,000 jobs in June

June nonfarm payrolls increased by 147,000 jobs—consistent with the 12-month average.

The labor market is steadily advancing, driven by strong hiring in healthcare and education, but underlying issues—like rising long-term unemployment and a shrinking labor force—suggest that not all parts of the economy are keeping pace.

Key takeaways:

• Compensation must still be competitive - especially in skilled sectors. However, wage inflation appears to be stabilizing.

• Engage inactive talent: Build campaigns for passive job seekers and discouraged workers.

• Benchmark often: Monitor wage trends monthly to stay aligned with market expectations.

Unemployment & Labor Force Participation

After being flat the last three months, the national unemployment rate declined slightly to 4.1% showing there's little slack in the labor market, yet long-term unemployment increased, and labor force participation declined again--despite more job openings--to 62.3%.  This indicates more Americans are sitting out of the job market. Talent acquisition leaders should prepare for continued labor constraints and deeper reliance on passive candidate engagement.

The jobless rate for Black or African American workers rose to 6.8% while Teen unemployment increased significantly from 13.4% to 14.4% showing strong volatility in entry-level hiring. Investing in inclusive hiring initiatives may help tap into underrepresented labor pools, especially youth and minority demographics. Managers should implement specific hiring strategies like internships and trainee programs to build worker pipelines.

The drop in labor force participation, combined with increases in discouraged workers (+256K) and marginally attached individuals (+234K), reveals a growing pool of willing but inactive job seekers. This group includes over 6 million people who want a job but aren’t actively looking.

HR teams should invest in outreach, employer branding, and flexible employment options to reactivate sidelined talent. Don’t rely solely on active applicants.

Industry-Specific Job Gains and Losses

Health care remains the top contributor to job growth in June, with strong gains in hospital and elder care employment. State and local governments also showed robust hiring, particularly in education. These areas continue to drive overall public sector expansion, even as federal employment declines. 

Sectors of the economy with significant job growth:

• State Government (+47K) - with 40K of those related to Education

• Healthcare: (+39K) - robust hiring across Hospitals and Nursing/Residential Facilities

• Local Government (+23K) - again predominantly related to Education

• Leisure and hospitality (+20K)

• Social Assistance: (+16K) - indicating more demand for community support roles

• Construction: (+15K)

Manufacturing, federal government, and professional/business services each lost 7,000 jobs. These declines could signal early effects of automation, budget tightening, or slowing demand.  For sectors like manufacturing, focus on reskilling programs and retention. Watch for longer-term structural shifts in federal and professional services roles.

Employment was flat in other major sectors–wholesale/retail trade, information, financial activities, professional/business services, and transportation/warehousing –suggesting broader market stability.

Earnings and Workweek Trends

Earnings data for June showed continued, though modest, wage growth with average hourly earnings reaching $36.30, a 3.7% increase over the past year – a sign that compensation is keeping pace with inflation, though not at the higher rates seen in prior quarters. Average weekly hours declined slightly, resulting in a minor dip in weekly earnings despite hourly wage increases.

Overall Outlook

Despite steady employment growth, long-term labor market participation has not returned to pre-pandemic levels. The slight decline in participation, combined with rising discouraged worker numbers, suggests challenges in drawing inactive workers back into the labor force. For HR professionals, this implies continued pressure to compete for a limited pool of available talent. Employers may need to offer more flexible working arrangements, competitive compensation, and training opportunities to attract sidelined workers.

As the hourly expert, Snagajob is here to help with your hiring needs. Contact our team today to learn more about our solutions for enterprise, mid-size, and small businesses.