June 2025 Jobs Report: 147,000 Positions Added as Government and Healthcare Drive Growth

The U.S. labor market delivered a surprisingly strong performance in June 2025, adding 147,000 jobs and surpassing economists' consensus forecast of 110,000 positions. The unemployment rate ticked down to 4.1% from 4.2% in May, while the labor force participation rate edged down to 62.3%, its lowest level since December 2022, according to the Bureau of Labor Statistics Employment Situation report released July 3.

June's report revealed a shifting composition of job growth, with state and local government leading the way with 73,000 positions, primarily driven by education hiring. Healthcare added 39,000 jobs, maintaining its position as a consistent growth engine, while social assistance contributed 19,000 positions. However, troubling signs emerged beneath the surface: long-term unemployment surged by 190,000 to reach 1.6 million workers, and the declining labor force participation suggests more Americans are exiting the workforce altogether.

Federal employment continued its contraction, losing another 7,000 positions and bringing total federal job losses to 69,000 since January 2025. Manufacturing shed 7,000 jobs, reflecting ongoing challenges from trade policies and tariff uncertainties.

The Headline Numbers: Better Than Expected, But Concerns Remain

The June employment report painted a picture of modest resilience overshadowed by worrying structural trends:

• Jobs Added: 147,000 new nonfarm payroll positions, beating the 110,000 consensus estimate
• Unemployment Rate: 4.1%, down from 4.2% in May
• Labor Force Participation Rate: 62.3%, down from 62.4% in May (lowest since December 2022)
• Long-Term Unemployment: 1.6 million workers (up 190,000), representing 23.3% of all unemployed
• Average Hourly Earnings: $36.30, up 0.2% monthly, +3.7% year-over-year
• Average Workweek: 34.2 hours, down 0.1 hour from May
• 12-Month Average: 146,000 jobs per month (down from 168,000 in 2024)

While June's 147,000 jobs beat expectations, the figure represents the 54th consecutive month of job growth but at a significantly decelerated pace compared to 2024's monthly average of 168,000. The drop in the unemployment rate from 4.2% to 4.1% would typically be celebrated, but the simultaneous decline in labor force participation suggests the rate fell partly because workers stopped looking for jobs rather than finding employment.

The surge in long-term unemployment is particularly concerning. When 190,000 additional workers join the ranks of those unemployed for 27 weeks or more in a single month, it signals that finding reemployment is becoming increasingly difficult. These workers face compounding challenges: skills atrophy, employer bias against employment gaps, and depleted savings that force difficult financial decisions.

Average hourly earnings growth of 3.7% year-over-year represents the slowest wage growth since mid-2024, continuing a deceleration that began when annual growth exceeded 4% earlier in the year. While 3.7% growth still outpaces inflation (running around 2.5-3.0%), the moderation suggests worker bargaining power continues eroding.

Sector-by-Sector Breakdown: Government Takes the Lead

State and Local Government: +73,000 Jobs (Leading Sector)

For the first time in the 2025 hiring cycle, government employment led all sectors, adding 73,000 positions in June. This dramatic shift from previous months reflects the fiscal year transitions typical of public sector employment:

• State Government: +47,000 jobs, with education adding 40,000 positions
• Local Government: +33,000 jobs, including 23,000 in education
• Federal Government: -7,000 jobs (total -69,000 since January 2025)

The surge in state and local education hiring reflects typical patterns as school districts finalize staffing for the upcoming academic year. Summer months frequently see education-related hiring spikes as districts fill teaching, administrative, and support positions before the new school year begins.

However, the sustainability of this growth is questionable. State and local governments face fiscal pressures from declining property tax revenues in some markets, reduced federal funding in certain programs, and ongoing budget constraints. While June's education hiring spike addresses immediate staffing needs, it doesn't necessarily signal a fundamental strengthening of the public sector job market.

The continued federal employment contraction (7,000 jobs lost in June, 69,000 since January) represents a sustained policy shift toward workforce reduction, mirroring trends in private sector companies as well. With nearly 70,000 federal positions eliminated in just six months, the pace shows no signs of slowing, creating ongoing uncertainty for federal employees, contractors, and the broader Washington, D.C. metropolitan economy.

Healthcare: +39,000 Jobs

Healthcare added 39,000 positions in June, its lowest monthly gain since early 2024, but still maintaining positive growth driven by structural demographic demand:

• Hospitals: +16,000 jobs, continuing to address persistent staffing shortages
• Nursing and Residential Care Facilities: +14,000 positions, driven by aging population needs
• Ambulatory Healthcare Services: +9,000 jobs across outpatient centers, physician offices, and specialized facilities

While 39,000 jobs represents solid growth, it falls short of healthcare's typical monthly gains throughout 2025 (averaging 44,000-51,000 in previous months). This moderation could reflect several factors: easing of acute staffing shortages as positions filled, reduced patient volumes in some markets, or financial pressures on healthcare providers leading to more selective hiring.

Despite the slowdown, healthcare remains one of the most reliable sectors for job seekers, with structural demand drivers (aging population, chronic disease management, expanded insurance coverage) ensuring continued employment growth regardless of broader economic conditions.

Social Assistance: +19,000 Jobs

Social assistance services added 19,000 positions, with individual and family services contributing 16,000 of those jobs. This sector's continued growth reflects increasing demand for childcare, mental health services, elderly care, and community support programs.

The sector's expansion aligns with broader social trends: working parents struggling to find affordable childcare, aging Baby Boomers requiring support services, and increased awareness of mental health needs driving counseling and therapy demand.

Leisure and Hospitality: +20,000 Jobs

Leisure and hospitality added 20,000 positions, suggesting consumer spending on experiences continues despite economic uncertainties. The June gains reflected hiring across restaurants, hotels, entertainment venues, and recreational facilities as businesses staffed up for summer travel and vacation season.

However, the 20,000-job gain represents a deceleration from the 48,000 positions added in May, potentially indicating that summer hiring was less robust than expected or that businesses are taking a more cautious approach amid concerns about consumer spending sustainability.

Construction: +15,000 Jobs

Construction added 15,000 positions, benefiting from summer weather that facilitates outdoor building activity. The gains spanned residential construction, commercial projects, and infrastructure work funded by federal legislation passed in previous years.

While 15,000 jobs represents positive growth, the construction sector faces headwinds from elevated interest rates that constrain housing starts and commercial development. The sector's performance in coming months will depend heavily on Federal Reserve policy decisions and the trajectory of commercial real estate values.

Manufacturing: -7,000 Jobs

Manufacturing shed 7,000 positions, marking the first significant monthly decline in the sector during 2025. Major technology firms like Microsoft and Intel have announced restructuring plans affecting manufacturing and operations. The job losses likely reflect ongoing challenges from trade policy uncertainties, tariff impacts on input costs, and cautious business investment amid economic uncertainty.

U.S. manufacturers face a difficult environment: tariff policies increasing costs for imported components, strong dollar making exports less competitive, and automation investments reducing staffing needs. While reshoring trends could eventually boost domestic manufacturing employment, near-term prospects appear challenging.

The Long-Term Unemployment Crisis

Perhaps June's most alarming statistic is the surge in long-term unemployment: 190,000 additional workers joined the ranks of those unemployed for 27 weeks or more, bringing the total to 1.6 million. Long-term unemployed now represent 23.3% of all jobless Americans.

This spike carries significant implications:

Individual Impact: Workers unemployed for six months or more face compounding challenges. Skills atrophy as workers remain out of their fields, employer bias increases against applicants with employment gaps, and financial resources deplete, forcing difficult decisions about housing, healthcare, and family support.

Economic Impact: Long-term unemployment represents substantial wasted human capital. When skilled workers remain sidelined for extended periods, their productivity, expertise, and contributions to economic growth are lost. The longer workers remain unemployed, the harder reemployment becomes, creating a vicious cycle.

Labor Market Signal: Rising long-term unemployment typically indicates a weakening job market where openings are scarce relative to applicants. When 190,000 workers in a single month cross the 27-week threshold, it suggests employers are becoming increasingly selective and job searches are extending far beyond typical timeframes.

Social Consequences: Prolonged joblessness correlates with increased mental health challenges, substance abuse, family stress, and long-term scarring effects on careers and lifetime earnings. The human toll extends far beyond immediate financial hardship.

The Federal Reserve and policymakers should view this surge as a warning sign that labor market softening may be more advanced than headline unemployment rates suggest.

Labor Force Participation: The Slow Exit

The labor force participation rate's decline to 62.3%, its lowest level since December 2022, represents approximately 250,000 individuals leaving the workforce. When combined with previous monthly declines, millions of Americans have exited the labor force over the past year.

This exodus can reflect several dynamics:

Discouraged Workers: After unsuccessful job searches, some individuals give up entirely, no longer meeting the definition of unemployed because they've stopped actively looking. The surge in long-term unemployment suggests many workers are reaching this breaking point.

Early Retirements: Older workers with adequate retirement savings may choose to exit the workforce rather than navigate a challenging job market. With many Baby Boomers in their 60s, early retirement represents an attractive option for those financially capable.

Caregiving Pressures: The high cost of childcare and elder care forces some workers to leave paid employment to provide unpaid family care. When professional care costs exceed potential wages, workforce exit becomes economically rational.

Health and Disability: Ongoing health challenges, including long COVID effects, push some workers out of the workforce either temporarily or permanently.

Education and Retraining: Some workers may be pursuing additional education or skills training, temporarily exiting the labor force with plans to return with enhanced credentials.

Regardless of the specific causes, declining participation reduces the economy's productive capacity and available tax base. If prime-age workers (25-54) are leaving the workforce in significant numbers, it signals underlying economic weakness not captured by unemployment rates.

Wage Growth Moderates Further

Average hourly earnings increased 0.2% in June to $36.30, bringing year-over-year growth to 3.7%, the slowest annual rate since mid-2024. This continued deceleration from the 4%+ rates seen earlier in 2025 suggests worker bargaining power is diminishing as labor market conditions soften.

The 3.7% annual wage growth carries different implications for various stakeholders:

For Workers: Wage growth at 3.7% continues to outpace inflation (running around 2.5-3.0%), meaning workers enjoy modest real wage gains and improved purchasing power. However, the deceleration from earlier highs signals reduced leverage in negotiations and fewer opportunities for substantial raises through job-switching.

For the Federal Reserve: Wage growth at 3.7% sits in a comfortable zone, high enough to support consumer spending and economic growth, but low enough to be compatible with the Fed's 2% inflation target. This gives policymakers flexibility to maintain current interest rates without pressure for further tightening.

For Businesses: Moderating wage pressure provides relief to labor-intensive industries that struggled with unprecedented wage increases during 2021-2023. Restaurants, retail, and hospitality sectors particularly benefit from reduced pressure to offer ever-higher starting wages.

The 0.1-hour reduction in average workweek to 34.2 hours, while small, suggests some employers are managing labor costs by reducing hours rather than headcount. When combined with modest wage growth, this points to businesses taking a cautious approach to labor utilization.

What June Means for Job Seekers and Workers

The June employment data offers job seekers and workers a complex picture with sectoral variations:

The Encouraging Signs:

• 147,000 jobs added beat expectations, maintaining positive growth
• Healthcare continues hiring with 39,000 positions (16,000 in hospitals alone)
• State and local government showing strong hiring for education (63,000 jobs combined)
• Social assistance growing steadily (19,000 jobs)
• Construction adding positions (15,000) as summer building season peaks
• Unemployment rate fell to 4.1%, historically low by pre-pandemic standards

The Warning Signs:

• Long-term unemployment surged by 190,000 to 1.6 million workers (23.3% of unemployed)
• Labor force participation fell to 62.3%, lowest since December 2022
• Federal employment cuts continue (7,000 in June, 69,000 since January)
• Manufacturing lost 7,000 jobs, first significant decline in 2025
• Average workweek declined to 34.2 hours, suggesting reduced hours
• Leisure/hospitality gains decelerated (20,000 vs. 48,000 in May)
• 12-month average job growth (146,000) significantly below 2024 pace (168,000)

For active job seekers, June's report suggests a labor market that remains functional but increasingly challenging. Healthcare offers the most consistent opportunities, with hospitals actively hiring despite overall sector moderation. View specific company hiring trends on our companies database. State and local government education positions provide options for those with teaching credentials or school support skills. Social assistance continues growing for workers in childcare, elder care, and counseling fields. For broader employment trends across industries, explore our analytics dashboard.

However, the 190,000-worker surge in long-term unemployment signals that job searches are taking longer and reemployment is becoming harder. Competition for available positions is intensifying, employer selectivity is increasing, and workers need to prepare for extended search timeframes.

For currently employed workers, June's data supports a cautious approach: maintain current positions while selectively exploring opportunities in growing sectors. The era of frequent job-switching for substantial pay increases has ended. Workers with specialized skills in healthcare, education, or high-demand technical fields retain some leverage, but those in commoditized roles face tough negotiations.

Federal employees and contractors should prepare for continued workforce reductions. Track the latest layoff announcements across sectors on our dedicated tracker. With 69,000 federal jobs lost in six months and no signs of policy reversal, those in government-adjacent roles face mounting uncertainty.

Economic Context: Resilience or Stagnation?

June's employment data arrived amid ongoing debates about the economy's true health. On one hand, 54 consecutive months of job growth, low unemployment, and positive wage gains suggest resilience. On the other, declining participation, surging long-term unemployment, and decelerating job creation point to underlying weakness.

Several factors continue shaping labor market dynamics:

Federal Reserve Policy: With unemployment at 4.1%, wage growth at 3.7%, and inflation moderating, the Fed appears content to maintain elevated interest rates through summer 2025. However, if labor market indicators continue softening, particularly if long-term unemployment keeps rising, pressure could mount for rate cuts.

Trade and Tariff Uncertainty: Manufacturing's 7,000-job decline reflects ongoing challenges from trade policy uncertainty. Until businesses gain clarity on tariff structures and trade relationships, investment and hiring in trade-sensitive sectors will likely remain subdued.

Government Fiscal Policy: While state and local governments showed strong hiring in June (73,000 jobs), this likely reflects seasonal education staffing rather than fundamental fiscal strength. Federal workforce reductions (69,000 jobs since January) continue creating ripple effects through contractors and the broader D.C. economy.

Consumer Spending Sustainability: Leisure and hospitality's deceleration (20,000 jobs in June vs. 48,000 in May) raises questions about consumer spending resilience. With credit card debt at record highs and savings rates well below pandemic peaks, any shock to consumer confidence could trigger significant pullbacks.

Long-Term Unemployment Trajectory: The 190,000-worker surge in long-term unemployment represents a potential inflection point. If this trend continues, it signals labor market weakness that headlines may understate.

Looking Ahead: Summer 2025 and Beyond

As the economy moves deeper into summer 2025, several factors will shape employment trends:

Seasonal Patterns: July and August typically bring strong gains in leisure and hospitality as tourism peaks. However, if June's deceleration in this sector continues, it could signal consumer caution rather than typical seasonal variation.

Federal Workforce Trajectory: With 69,000 federal jobs lost through June, the question becomes whether cuts accelerate, stabilize, or begin reversing. The pace will significantly impact the Washington, D.C. economy and government contractor employment.

Long-Term Unemployment Monitoring: June's 190,000-worker surge demands close attention. If July shows continued increases, it confirms a troubling trend. If numbers stabilize or decline, June could represent a one-time statistical aberration.

Manufacturing Outlook: June's 7,000-job loss needs context from subsequent months. A single-month decline doesn't establish a trend, but continued losses would signal serious challenges in the sector.

Labor Force Participation: The decline to 62.3% (lowest since December 2022) raises questions about whether workers will return or remain sidelined. Prime-age participation rates (25-54) will be particularly telling.

Job Openings Data: The June JOLTS report (released July 29) showed job openings declining to 7.437 million, down 275,000 from May. Continued declines would signal cooling employer demand ahead of further employment softening.

Conclusion: Modest Growth Masks Growing Concerns

The June 2025 employment report showed the U.S. labor market adding 147,000 jobs with unemployment falling to 4.1%. State and local government led with 73,000 positions (primarily education), while healthcare contributed 39,000 jobs and social assistance added 19,000. Federal employment declined 7,000, bringing total government job losses to 69,000 since January.

However, beneath the surface-level resilience, concerning trends emerged. Long-term unemployment surged by 190,000 workers to reach 1.6 million (23.3% of all unemployed), signaling that finding reemployment is becoming increasingly difficult. Labor force participation fell to 62.3%, its lowest level since December 2022, suggesting hundreds of thousands of Americans are exiting the workforce. Manufacturing shed 7,000 jobs, its first significant decline in 2025.

Wage growth moderated to 3.7% year-over-year, the slowest pace since mid-2024, indicating diminishing worker bargaining power. The average workweek declined to 34.2 hours, suggesting employers are managing costs by reducing hours. The 12-month average job gain of 146,000 falls well short of 2024's 168,000 monthly average.

For workers and businesses, June's report underscores the labor market's transition from the extremely tight conditions of 2021-2023 to a more balanced but increasingly challenging environment. Healthcare, education, and social assistance offer the strongest employment prospects, while federal workforce reductions and manufacturing weakness create uncertainty in other sectors.

The key question for the remainder of 2025 is whether June's troubling undercurrents, surging long-term unemployment, declining participation, sector-specific weakness, represent temporary aberrations or early signals of more significant labor market deterioration ahead. The answer will determine whether the Federal Reserve maintains its patient approach or begins considering rate cuts to support employment.

Data sources: U.S. Bureau of Labor Statistics Employment Situation Summary (released July 3, 2025) and Job Openings and Labor Turnover Survey (released July 29, 2025 for June data). All statistics represent preliminary data subject to revision in subsequent monthly reports.

Article Updates

July 3, 2025: Initial publication based on BLS Employment Situation report for June 2025.

July 29, 2025: Updated with JOLTS data for June 2025. Job openings declined by 275,000 to 7.437 million, while hiring fell by 261,000 to 5.204 million. The data reinforces concerns about cooling employer demand, with accommodation and food services seeing significant declines in openings. The combination of declining openings, reduced hiring, and surging long-term unemployment suggests a labor market in gradual deceleration.

August 1, 2025 (MAJOR REVISION): The July 2025 BLS Employment Situation report included a massive downward revision to June's employment data: June was revised from 147,000 jobs down to just 14,000 jobs, a 133,000-job reduction. This revision fundamentally changes June's narrative from "steady growth beating expectations" to "near-stagnation." Combined with May's revision from 144,000 to 19,000 jobs, the two months saw a combined 258,000-job downward revision. The revised figures reveal that the labor market in spring 2025 was significantly weaker than initial reports suggested. See the July 2025 Jobs Report for complete analysis of these revisions and their economic implications.