Insights 
VT 
The US jobs report for June 2025 indicates non-farm payrolls rose by 147K, surpassing expectations of 110K. The prior figure was revised from 139K to 144K. Two-month net revision reached +16K from a previous -95K. The unemployment rate was 4.1%, better than the anticipated 4.3%, and down from 4.2% previously.
The labour force participation rate slightly dipped to 62.3% from 62.4%. Average hourly earnings remained unchanged month-on-month and year-on-year, with the expectations set at +0.3% and +3.9%, respectively. Average weekly hours worked were 34.2 compared to an expected 34.3. Private payrolls increased by 74K, below expectations of +105K, registering the lowest growth since October 2024.
Key Insights on Employment Trends
Manufacturing payrolls showed a modest increase of 7K against an expected decrease of 5K. Government employment rose by 73K, while full-time jobs increased by 437K, contrasting with a substantial decrease in part-time jobs by 367K. According to the household survey, jobs increased by 93K.
Market reactions include a rise in USD/JPY from 143.87 to 144.97, and yields moving up 3-9 bps. Most new jobs were government-related, mainly in state and local education sectors.
What we’re seeing here is a mixed bag with a sharper edge than the headline figures might initially suggest. While the headline payroll gain of 147,000 came in better than expected, the surprise isn’t especially large when you factor in the two-month net revision of +16,000. However, it tilts the balance slightly away from the narrative that the labour market is softening at an accelerating rate.
The unemployment rate falling to 4.1% from 4.2%, below forecasts, adds pressure on the idea that slack is growing meaningfully. Yet, labour force participation slipping marginally to 62.3% manages to muddy that strength. More of the population stepping back makes a lower unemployment rate easier to achieve without actual improvement in hiring appetite.
Wage data might be the quietest yet the most telling segment — flat growth month-on-month and 3.9% on the year. This puts pay growth outside the range often associated with strong inflation pressure. Here’s where the Federal Reserve focus sharpens. With average hourly earnings not picking up and hours worked sliding slightly, momentum in overall income is fading. That gently lowers concerns over demand-led inflation, despite the headline job gains.
Market Reactions and Economic Implications
Private sector hiring, particularly, is the part that starts to raise questions. Just 74,000 new private sector jobs, far below what was forecast, signals a broader cooling beneath the surface strength. Businesses, especially smaller ones outside of government reliance, appear more cautious in expanding teams. In contrast, nearly half of total jobs added came from government hiring — a category less responsive to economic headwinds.
Manufacturing held up better than anticipated, but with only a 7,000 increase, we’re not talking about a resurgence in factory-driven tailwinds. It points to resilience, not acceleration. Same goes for workweek duration. That average inching down by one-tenth of an hour doesn’t invoke alarm, but it gives clues that employers are managing demand by trimming hours instead of adding headcount.
The household survey, which saw a 93,000 increase in employment, stays broadly consistent with the slower momentum we’ve been tracking — yet it’s the changing mix that deserves attention. Full-time roles surged, while part-time jobs collapsed by over 360,000. That’s not noise. It suggests a rotation towards more stable employment, possibly linked to greater competition for fewer positions, or part-timers being consolidated into permanent slots. Either way, it reaffirms the trend: more people want steady hours, and employers are responding carefully.
Now, currency and bond markets showed their cards quickly. Dollar strength and yield bumps reflect fading expectations of near-term cuts. Investors watched the downside surprises in private payrolls and wages but translated the unemployment rate drop and government hiring into enough perceived resilience to temper urgency. In other words, there was enough heat in the jobs data to push away the idea of immediate loosening.
As traders, we interpret this as a guidepost. Risks remain asymmetrical, but volatility is now more data-triggered than narrative-led. Positioning should reflect the fine balance of interpreting not just rate expectations but also the source and quality of employment growth. Moves like these should not be treated as a directional break but rather a recalibration of short-term assumptions.
In the coming weeks, we’ll likely see this report re-analysed as inflation prints and corporate earnings begin to fill in the macro gaps. The divergence between private and public hiring tells us that caution is warranted in treating headline job strength as organic growth.
