Miran Says Fed Overly Fixated on Tariffs

White House Council of Economic Advisers Chair Stephen Miran reacts to the June employment report and discusses what it could mean for Federal Reserve monetary policy on "Bloomberg Open Interest." US payrolls increased 147,000 last month, driven by a jump in state and local government employment, and the unemployment rate fell to 4.1%.

US job growth exceeded expectations in June as an unusual surge in public education employment masked a slowdown in hiring across the rest of the economy.

Payrolls increased 147,000 last month, driven by a jump in state and local government employment, according to a Bureau of Labor Statistics report out Thursday. The jobless rate declined to 4.1%, indicating employers remain reticent to lay off workers.

Private payrolls rose just 74,000 in June, the least since October and largely due to health care. The figures are consistent with sluggish hiring as employers grapple with President Donald Trump’s erratic trade policy and await congressional approval of his signature tax legislation.

“Ignore the boost from education jobs; private demand for labor is slowing,” Samuel Tombs, chief US economist at Pantheon Macroeconomics, said in a note. “The tariff tax hike, restrictive monetary policy and worries about a further intensification of the trade war are weighing heavily on labor demand.”

Treasury yields rose and the S&P 500 climbed as the figures took pressure off the Federal Reserve to lower interest rates at the end of this month. Fed Chair Jerome Powell has said there is no rush to reduce borrowing costs until there is more clarity about the impact of tariffs on inflation. Price pressures have been subdued so far this year.

Powell recently told lawmakers that if the labor market were to meaningfully weaken, it would be possible to cut rates sooner than expected.

State government payrolls climbed by the most since the start of 2023, led by education, while employment at local governments also surged. Several economists cast doubt on the strength of the figures, pointing out possible seasonal adjustment issues.

Broader Moderation

Health care and social assistance payrolls rose 59,000, the least in four months. Employment also moderated in leisure and hospitality, as a 20,000 increase in June followed a downward revision of similar size in May. Payrolls declined in manufacturing, wholesale trade and business services.

The jobs report is composed of two surveys — one of businesses, which produces the payrolls figures, and another of households, which publishes unemployment and participation. While the number of unemployed fell for the first time in five months, the participation rate — the share of the population that is working or looking for work — also declined.

In addition to its trade strategy, the Trump administration is implementing what the president has vowed will be the largest mass deportation of undocumented immigrants in history. That has implications for the labor market as foreign-born workers have been a major source of job growth in recent years.

Thursday’s data showed the size of the foreign-born labor force declined for a third straight month to the lowest level this year. Over the last three months, the foreign-born labor force has fallen the most in data back to 2007 when excluding the onset of the pandemic.

Other data recently have pointed to a cooling labor market. Recurring jobless claims — a proxy for people who already receive unemployment benefits — have surged since early May and stand at the highest level since the end of 2021.

Another closely watched measure is the differential between people saying jobs are plentiful versus those saying they’re hard to get in the Conference Board consumer confidence survey. The gap is currently the smallest since March 2021.

Economists are also paying close attention to how labor supply and demand dynamics are impacting wage gains. The report showed average hourly earnings increased 0.2% from May and 3.7% from a year ago — the smallest since July 2024. The length of the workweek declined, further reinforcing signs of slower demand.

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