The labor market added 147,000 new jobs last month while the unemployment rate declined to 4.1%. Both metrics were met with surprise by macroeconomic forecasters as they were considerably outside of consensus estimates.
The report surprised many given the continued economic uncertainty spurred by the ongoing trade wars with other countries. While the topline figure was positive, it masks structural problems in the economy.
The private sector added 74,000 jobs in June, with the majority coming from the healthcare and leisure/hospitality sectors. Among all industries that had a positive net job growth in June, 51% of total hiring came from those two sectors alone.
ADP, the payment processing firm, reported that the private sector shed approximately 33,000 jobs – or around 100,000 fewer than the job figures from the BLS.
Whether one uses the BLS or ADP’s report, the three-month private sector job gains have slowed in the first half of 2025. The private sector’s decline in job growth has been especially pronounced, going from 200,000 in December to just 19,000 in June. Private businesses with under 50 employees, which are considered the backbone of the economy, shed 47,000 jobs in June.
The career placement firm Challenger’s monthly report found that job cuts in the first half of this year were the highest since 2020. They also noted that retailers were the largest shedders of jobs, with the industry being hit the hardest by market volatility, tariffs and reduced consumer spending.
The Challenger report states that economic conditions were the most cited reason for layoffs in the private sector. Despite this, employment firms plan to hire workers at a higher rate in the second half of the year compared to this time last year. What is unclear is if this hiring will benefit all groups, such as recent high school and college graduates who are having a difficult time acquiring suitable jobs.
The labor market experiences of Black and Brown workers is also souring. The unemployment rate of Black workers rose to 6.8%, the highest rate since January 2022. While month-to-month changes are difficult to interpret and may simply be statistical noise, broader economic trends suggest that the challenges facing Black workers stem partly from the recent trade war.
Black workers are more likely to work in the transportation and warehousing sectors (especially Black men), which are industries that have been hammered by trade uncertainty and slow hiring in recent months. Cuts to the federal government, which has a history of providing employment opportunities to Black Americans, may also be depressing Black employment rates.
The decline in the unemployment rate to 4.1% was due to a decline in the labor force by over 130,000 workers. That contraction is likely a byproduct of the current administration’s hardline immigration policy: The total number of foreign-born workers has dropped by almost 1 million since the beginning of the year.
Other labor market metrics show signs of concern as well. The number of continued unemployment claims reached its highest level since November 2022. While the number of new claims decreased slightly, the total unemployed population continues to rise. The household survey for June found that the number of long-term unemployed individuals (27 weeks and more) is close to its highest level since the beginning of 2022.
Thus far, the anticipated uptick in consumer prices due to tariffs has not materialized, though that was before the recent announcement of potentially more tariffs effective August 1. Like the previous trade war incidents, the President could end up rescinding these measures. This kind of policy erraticism means that uncertainty has unfortunately become the modus operandi for business, households and governments alike. One thing is clear: It is increasingly difficult to attain stable employment and economic security for large swathes of American society.
Joseph Dean is the Jr. Racial Economic Research Specialist with NCRC’s Research team.
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