US Jobs Data Out: Boom in Government Sector, Not So in Private Sector

Jobs grew unexpectedly in June 2025 as per the data released from the US Labor Department. However, the government sector contributed more than half to the non-farm payroll. The private industry sector, however, had the smallest share in eight months, owing to economic headwinds that many businesses faced during the month.

Muted Decline in Unemployment Rate in June

The Labour Departments data revealed a slight decrease in the unemployment rate to 4.1% in June from 4.2% a month ago. The average workweek was found to be shorter in June, indicating reduced working hours across businesses.

Donald Trump‘s Tariff Policies Have Bothered Businesses, Say Economists

Public perceptions about the US economy have become negative owing to US President Donald Trump’s anti-growth policies, according to economists. The policies include sweeping tariffs on imports, sharp spending cuts from the US regime, and large-scale deportations of migrants. Donald Trump's victory in the presidential election last year improved business and consumer sentiment as expectations of tax cuts and a not-so-stringent regulatory environment weighed in.

The Tussle Between Trump and Fed Chair Powell for Rate Reductions May Continue

The job report, which seems mixed in the wake of poor growth in job additions across the private sector, may make it harder for Fed Chair Jerome Powell to start cutting interest rates in July 2025. The Federal Reserve Meeting may consider sharp rate reductions later. Chief Economist at Raymond, James Eugenio Aleman, said that despite the overall job numbers remaining strong, the weakness across the private sector indicates continued weakness across the labour market in June should make the Federal Reserve start easing the monetary cycle.

Heres the Employment Chart Across the US

The report, published a day before because of the Independence Day Holiday on Friday, revealed a more-than-expected rise in payrolls. However, it also indicates a slowdown in job growth and concentration of jobs in only a few industries.

Government employment grew by 73,000, including a hike of 40,000 in state government education and 23,000 across local government education. Federal government job losses continued as the Trump administration slashed headcount and spending. As many as 7,000 positions were lost in May. Federal government employment has fallen by 69,000 since January.

74,000 jobs were added across private payrolls in June, the fewest number of additions since October 2024. A month ago, the job addition across the private sector stood at 137,000. The employment rise data during June fell below the average three-month gain i.e. 115,000.

Sector-based US Jobs Data

The healthcare sector accounts for a major share of the countrys employment growth during June 2025. It added 39,000 jobs across hospitals, nursing centres and residential care facilities. 19,000 jobs were added in the social assistance sector. However, job growth remained muted across other sectors.

Manufacturing and wholesale trade saw 7,000 and 6,600 job losses, respectively, owing to import duties levied by the US administration. At the same time, professional and business services saw 7,000 job losses. The retail sector saw a minuscule 2,400 job additions. However, construction payrolls rose by 15,000, while payroll increases across transportation and warehousing services stood at 7,500.

Wrapping Up

The better-than-expected US jobs data contains a prominent weakness across the countrys private sector that needs an economic boost from less stringent tariff policies, as well as monetary easing by the US Fed meetings scheduled to happen throughout the remaining months in 2025. Economic headwinds must make way for an industrial-growth oriented regime for the US to continue job additions at an improved pace.

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