Trump's Trade War Rattles Hiring as Private Sector Weakens

The U.S. economy added 147,000 jobs in June, significantly surpassing expectations, primarily driven by a surge in public school hiring while most other sectors stagnated. According to Thursday's Bureau of Labor Statistics report, unemployment dipped to 4.1% with fewer Americans actively seeking work. However, beneath the surface, private sector growth revealed concerning weakness - adding just 74,000 positions (the lowest since October), with 59,000 coming from healthcare alone (a four-month low). Manufacturing, wholesale trade, and business services all shed jobs, while leisure/hospitality gains were offset by downward May revisions.

This hiring slowdown coincides with President Trump's renewed push for unpassed tax cuts and ongoing trade policy uncertainty. "Ignore the education sector boost - private labor demand is slowing sharply," warned Pantheon Macroeconomics' Samuel Tombs, citing tariff impacts, tight monetary policy, and escalating trade war fears. Markets reacted swiftly: Treasury yields and the dollar rose as investors anticipated delayed Fed rate cuts.

Despite manufacturing struggles, Mutual of America's Joe Gaffoglio noted labor market resilience and a yearly high in wage growth. Yet BMO's Ian Lyngen expects no July rate cut, with focus shifting to September. LPL Financial's Jeffrey Roach observes continued business expansion willingness, while Goldman Sachs' Simon Dangoor warns current stability may prove temporary without inflation recovery.

"The economy keeps outperforming expectations," remarked Manhattan Institute's Allison Schrager, citing strong JOLTS and inflation data. Citizens Bank's Eric Merlis noted June's labor market held steady despite geopolitical tensions, with benign wage growth allowing Fed patience. ClearBridge's Jeff Schulze ruled out July cuts, highlighting three positives: job growth, lower unemployment, and upward revisions - though soft wage growth maintains non-inflationary conditions.