One third of all jobs created in June were in government

The June jobs report revealed stronger-than-expected job growth, with 206,000 new jobs added, but a third of those were in the government sector.

Government employment increased by 70,000, well above last year’s average of 49,000.

The sector’s employment was boosted by education and local, non-state, government. The health care sector added 49,000 jobs, driven by increased employment in outpatient medical services and hospitals.

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The construction sector added 27,000 jobs, but retail and manufacturing employment fell.

Professional and business services employment fell by 17,000, and temporary jobs fell by about 49,000, likely a sign of slower employment growth going forward.

Economists say that given the recent surge in immigration, the economy needs to create at least 150,000 jobs per month to keep up with the growing working-age population.

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In a positive sign for the Federal Reserve and its fight against inflation, the unemployment rate rose to 4.1% from 4% and wage growth slowed to levels not seen since 2021.

Government employment increased by 70,000, well above last year’s average of 49,000. (Reuters/Andrew Kelly/Reuters Photo)

Average hourly earnings rose 0.3% last month after rising 0.4% in May. Wages rose 3.9% in the 12 months through June. That was the smallest wage increase since June 2021 and followed a 4.1% increase in May. Wage increases in the 3% to 3.5% range are seen as consistent with the Fed’s 2% inflation target.

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Also of note were downward revisions for April and May: April employment was revised down from 165,000 to 108,000, and May employment was revised down from 272,000 to 218,000.

Reuters contributed to this report.