The US labor market proved stronger than expected in the month of June, with the economy adding 147,000 new jobs—beating analysts’ expectations. The unemployment rate has fallen to 4.1%, down from 4.2%. More good news: this is happy talk and very encouraging signs that the job market is starting to turn the corner a bit! However, not all the indicators pointed in the right direction. The typical length of unemployment shot up, and the proportion of long-term unemployed exceeded three-year highs.
“We are as excited as you are,” Gina Bolvin, president of Bolvin Wealth Management Group, stated, “The June jobs report is like a summer blockbuster — plenty of action and a surprise twist. Despite tariffs, DC drama and global headwinds, the US labor market just pulled off a better-than-expected performance.” This positive outlook is part of a larger, more general surge in optimism from economists about the state of the economy.
Mixed Signals in Job Growth
While June was another month of net new jobs, there were a number of warning signals in the private sector. Jim Baird, chief investment officer at Plante Moran Financial Advisors, noted that “businesses are a little bit more hesitant to hire.” The report showed that job growth wasn’t broad-based among different sectors of the economy, which always raises red flags about sustainability.
There are signs that the labor market is turning around. Nonetheless, the increase in average duration of unemployment suggests that more people continue to have trouble finding jobs. The share of unemployed workers who have been jobless for 27 weeks or more is increasing. This trend is now nearly at a record three-year high. Each of these developments point to deeper challenges that remain within the labor market, even as the national picture has brightened considerably.
Economic Outlook and Potential Rate Cuts
Now, the June jobs report is set to have enormous monetary policy implications. Seema Shah, chief global strategist at Principal Asset Management, commented on its impact: “A few Fed speakers have shown their inclination to cutting interest rates as early as this month. Today’s data of higher than expected payrolls, a drop in the unemployment rate and a fall in jobless claims completely dispels their case for imminent rate cuts and implies that there is absolutely no urgency for Fed support.”
Futures traders have reacted to this data by pulling back interest rate cut expectations. Now the odds of a Federal Reserve rate cut in July have dropped to 4.7%. That amount represents a huge decrease from the 23.8% chance just prior to the jobs report dropping. Given the uncertain economic situation, this continued shift is a signal of increasing confidence in the economy’s stability and resilience.
David Laut, chief investment officer at Abound Financial, remarked on the broader implications of the report: “The stock market is starting off the second half of 2025 on a strong foot, with stocks continuing to make record highs as investors start to price in fading tariff uncertainty and optimism over tax cuts and continued economic resiliency.”
Market Reactions and Future Considerations
Those encouraging job growth numbers have strengthened investor sentiment, which is reflected in surging stock markets. David Russell, global head of market strategy at TradeStation, noted that this report delivers “good news for the economy and corporate earnings because there’s no sign of a recession.” Not every analyst is as hopeful about the future as McKenzie.
Speaking on the same panel, Chris Zaccarelli, chief investment officer at Northlight Asset Management, warned against costly valuations in today’s market environment. He warned that all this third-party money and frothy valuations might be making the market susceptible to a nasty surprise someday.