U.S. economy added 206,000 jobs in June, unemployment rate rises to 4.1%

The U.S. economy again added slightly more jobs than expected in June though the unemployment rate increased, the Labor Department reported Friday.

Nonfarm payrolls increased by 206,000 for the month, better than the 200,000 Dow Jones forecast though less than the downwardly revised gain of 218,000 in May, which was cut sharply from the initial estimate of 272,000.

The unemployment rate unexpectedly climbed to 4.1%, tied for the highest level since October 2021 and providing a conflicting sign for Federal Reserve officials weighing their next move on monetary policy. The forecast had been for the jobless rate to hold steady at 4%.

The increase in the unemployment rate came as the labor force participation rate, which indicates the level of working-age people who are employed or actively searching for a job, rose to 62.6%, up 0.1 percentage point.

A broader unemployment rate which counts discouraged workers and those holding part-time jobs for economic reasons held steady at 7.4%. Household employment, which is used to calculate the unemployment rate, increased by 116,000.

Though June job creation topped expectations, it was due in large part to a 70,000 surge in government jobs. Also, health care, a consistent leader by sector, added 49,000 while social assistance contributed 34,000 and construction was up 27,000.

Several sectors saw declines, including professional and business services (-17.000), and retail (-9,000).

On wages, average hourly earnings increased 0.3% for the month and 3.9% from a year ago, both in line with estimates. The average work week was steady at 34.3 hours.

In addition to the substantial revision in the May payrolls count, the Bureau of Labor Statistics lowered April to just 108,000, a slide of 57,000