Job growth beats expectations as pressure mounts on Powell to cut rates

The housing industry is desperate for any news that might signal a near-term interest rate cut, but it didn’t get any from Thursday’s jobs report.

According to data from the U.S. Bureau of Labor Statistics (BLS), employers added 147,000 jobs in June, pushing the unemployment rate down to 4.1% and reducing the already-low chances that the Federal Reserve will cut interest rates later this month.

The numbers beat analysts’ projections and represent an increase from the 139,000 jobs added in May.

“Signs of a cooling labor market in today’s BLS report could have provided the Federal Reserve the data it needs to cut interest rates when they meet at the end of July,” Bright MLS chief economist Lisa Sturtevant said in a statement.

“However, with the employment numbers coming in strongly and with continued expectations that tariffs will lead to higher inflation, it is likely that the Fed is again going to hold off on rate cuts.”

Construction jobs, which tend to be a leading indicator of the direction of the economy, clocked in at 8.3 million, little changed from May or June.

Many sectors of the economy, however, showed strong job gain — most notably health care, state government and local government. Jobs in the federal government dropped by 7,000 as Washington, D.C., continues to grapple with the layoffs initiated under Elon Musk’s U.S. DOGE Service.

“At first glance, this is a good June jobs report with solid job gains and lower unemployment,” Navy Federal Credit Union chief economist Heather Long said in a statement. “But almost all of the job gains came from just two sectors: government and health care.

“Hiring was anemic in other parts of the economy. The job market is in a strange place right now. The United States needs to see a pickup in other parts of the labor market beyond health care and state and local government.”

Employment is just one of many variables Fed Chair Jerome Powell and other policymakers are weighing in their decision to cut the federal funds rate, which would put downward pressure on mortgage rates. Powell indicated this week that the global trade war initiated by President Donald Trump in April delayed a cut.

The Trump administration hasn’t responded kindly. Trump and Federal Housing Finance Agency (FHFA) Director Bill Pulte have regularly berated Powell on social media, demanding that he lower interest rates despite what macroeconomic indicators say.

On Wednesday, Pulte demanded an investigation of Powell after his congressional testimony about renovations made to the Fed’s headquarters, saying that alleged inaccuracies were enough to remove the chairman “for cause.”