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Economic News

United States: Private Sector Hiring Slows

July 3, 2025
Francis Généreux
Principal Economist

Highlights

  • The establishment survey indicates a net gain of 147,000 jobs in June, following increases of 144,000 in May (revised from 139,000) and 158,000 in April (revised from 147,000).
  • Average hourly earnings growth moderated, rising by 0.2% in June after a 0.4% gain in May. On a year-over-year basis, wage growth edged down from 3.8% to 3.7%.
  • The unemployment rate declined from 4.2% in May to 4.1% in June.

Comments

The pace of hiring in the US remains relatively firm. Once again, job creation as measured by the establishment survey exceeded consensus expectations, which had called for a net gain of 106,000 positions.

However, the upside surprise was largely concentrated in one area: the public sector. Government employment rose by 73,000 in June, marking the strongest monthly gain since March 2024. Does this mean that federal government downsizing has come to an end? Not quite. In fact, 7,000 jobs were lost at the federal level last month. The gains were entirely driven by state and local governments, particularly in education (+63,500 jobs). This could reflect seasonal adjustment effects and fewer layoffs (unadjusted) than usual at the end of the school year.

Private sector job growth was relatively subdued in June, with only 74,000 new positions added—the weakest performance since October 2024, when hiring was impacted by hurricanes and a strike in the aerospace industry. This result also came in below consensus expectations. Net job losses were recorded in several sectors, including natural resources, manufacturing, wholesale trade, transports, professional services, and “other services.” Only 49.6% of the 250 industries tracked reported job gains in June, down from an average of 53.3% over the past 12 months.

The household survey continues to show volatility. After a sharp drop in employment in May, the June data show a gain of 93,000 workers. The survey also points to a further decline in the labour force and participation rate, which largely explains the first drop in the unemployment rate since January. It raises the question of whether the Trump administration’s immigration policies are beginning to affect these results.

Implications

All in all, the US labour market remains relatively resilient. That said, some cracks are beginning to emerge. It will be important to monitor whether the slowdown in private sector hiring deepens in the coming months. If so, it could pave the way for policy rate cuts by the end of the summer.

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