U.S. Employment Grows Amid Slowing Labor Market

U.S. employment rose significantly in June, driven largely by government hiring, while the unemployment rate reached a 2.5-year high of 4.1%. The job growth trend appears to be slowing, adding to expectations that the Federal Reserve may start cutting interest rates this year to support the economy.

U.S. employment surged in June, largely due to government hiring, with the unemployment rate climbing to a 2.5-year peak at 4.1%. The latest figures suggest a cooling labor market, bolstering expectations that the Federal Reserve may initiate interest rate cuts this year to sustain economic momentum.

Data from the Labor Department revealed the economy added fewer jobs in April and May than initially estimated. Annual wage growth also slowed to its lowest in three years, increasing labor pool entrants and leading to the jobless rate rise. The report, combined with moderating prices in May, could instill confidence among Fed policymakers regarding inflation trends.

Economists polled by Reuters had anticipated a smaller job growth and an unchanged unemployment rate for June. However, the actual figures showed notable gains, particularly in the healthcare sector and state and local governments. Despite this, certain sectors such as retail and manufacturing saw job losses, potentially signaling slower payroll gains ahead.

(Disclaimer: With inputs from agencies.)