Wage growth decelerated, although it still outpaced consumer inflation. But this has not translated into rosy sentiment over the broader economy, adding to President Joe Biden's challenges as he seeks reelection.
"We have more work to do, but wages are growing faster than prices and more Americans are joining the workforce," Biden stressed in a statement after the report came out.
The country added 206,000 jobs last month, the Labor Department said, marking a slower pace of hiring than May's revised 218,000 figure.
The gains beat a Briefing.com consensus estimate of 185,000, signaling that the labor market remains relatively resilient despite high interest rates.
The jobless rate ticked up from 4.0 percent to 4.1 percent.
For now, the figures point to a "very gradual, orderly cooling" in the market, ZipRecruiter chief economist Julia Pollak told AFP.
But she pointed to signs of weakness, including downward revisions to April and May hiring numbers by a cumulative 111,000.
The uptick in unemployment, though narrow, also marks the highest level since November 2021 -- ending a 30-month stretch where the rate stood at or below 4.0 percent.
'Slowing' market
More than one-third of overall gains came from government employment, noted Mike Fratantoni, chief economist at the Mortgage Bankers Association. This means that headline numbers do not paint a full picture of the labor market's health.
"Other aspects of the data indicate a slowing job market," he said in a note.
Temporary hires dropped by 49,000, indicating that business demand for labor is falling, Fratantoni said.
Wage growth slowed from 0.4 percent in May to 0.3 percent last month, according to the report.
Compared with a year ago, the increase was 3.9 percent -- also easing from before.
"Weakening demand for labor will lead to further moderation in wage growth," said economist Nancy Vanden Houten of Oxford Economics.
But this is likely to bolster the Federal Reserve's confidence that inflation is on a downward path to policymakers' two percent target.
Rate cut?
The latest report comes on the back of a slump in business activity in the manufacturing and services sectors, alongside easing inflation.
While there is some way to go, these indicators will likely give the US central bank more confidence to begin cutting interest rates -- after holding them at a high level in recent months to ease demand and lower inflation.
Rate cuts are expected to, in turn, give the economy a boost.
Rubeela Farooqi, chief US economist at High Frequency Economics, expects the Fed could start talks about cutting rates at their next policy meeting.
They could "lower the policy rate in September, if the data continue to show moderation," she said.
For now, she noted that even though wage growth has decelerated, the rates of change remain elevated compared to pre-pandemic trends.
On the data's bearing on Fed policy, Pollak earlier told AFP: "The trend that matters most is continued disinflation in the various measures of consumer and producer prices."
"The second-most important trend is deceleration in wage growth," she said.
