Instead, the latest employment data exceeded forecasts, and a broad range of industries reported job gains. The latest data takes away one source of anxiety even as the U.S. faces potential new threats from Britain's vote to leave the European Union. Already, so-called "Brexit" has led to a sharp decline in the value of the pound and a large appreciation of the U.S. dollar, which will make it more difficult for American companies to sell overseas.
"At first blush, it’s a big exciting jobs number, and really reassuring after last month’s number," said Tara Sinclair, chief economist for job site Indeed and a professor at George Washington University.
Other figures released Friday told a more nuanced story. The official unemployment rate rose to 4.9 percent from 4.7 percent the previous month, a trend which might sound negative for the economy, but largely reflected more people looking for jobs.
Wages also grew at one of the fastest paces since this cycle of economic expansion began in 2009, rising 2.6 percent in June from the previous year. Yet economists said that level of wage growth, while welcome, is still not strong enough to indicate a labor market where companies are competing vigorously for employees.
Despite the strong jobs numbers, analysts say the Federal Reserve remains unlikely to raise interest rates when it meets later this month. Fed officials had already signaled they would not raise rates at the meeting after May's weak report and amid the "Brexit" fallout. A weak June report might have dashed any possibility of raising at any point this year, but the strong numbers could keep a rate hike on the table.
Markets surged in reaction to the news. The Dow Jones Industrial Average rose 250.86 points, or 1.4 percent, to 18,146.74, while the Standard & Poor's 500 closed at a near record of 2,129.90, up 32 points, or 1.53 percent.
In its report, the Labor Department also revised upward job growth for April and revised downward the already-dismal figures for May. Last month, the department reported that the U.S. had added only 38,000 jobs in May; on Friday, it lowered that figure to 11,000.
Economists said the weak growth in May likely stemmed in part from a statistical anomaly or seasonal trends. A temporary strike by 35,000 workers at Verizon exacerbated the monthly rebound, removing the workers from the rolls in May but adding them back in June.
Many economists cautioned that a single month’s readings can be volatile, and that the data should be interpreted as part of a longer-run trend. Taken together with other growth figures this year, the newly released job data indicate that U.S. economy is expanding steadily, though not surging, as the labor market gradually moves closer to a full recovery from the recession.
The U.S. economy is now on pace to add 172,000 jobs a month on average in 2016, a figure that is down from 2015, which was in turn less than 2014. Labor Secretary Thomas Perez said in an interview that is what is expected as the jobs market fully heals.
"We’re not at full employment yet," he said. "But the closer you get ... the pace of job growth slows, and the pace of wage growth hastens."
Both low-wage industries such as hospitality and retail and high-wage sectors such as healthcare added jobs in June. Hiring remained flat in construction, which is often seen as a bellwether for economic growth, as well as in manufacturing, which has been hit by a strong U.S. dollar and fragile export markets. The mining and transportation sectors shed jobs.
The U.S. economy still shows signs of longer-term challenges, economists said. Many people of prime working age may be sitting on the sidelines of the labor market or in jobs that do not fully utilize their talents. And businesses are not investing at rates that suggest they expect a booming economy is on the horizon.
“Many indicators of economic progress are pointing in the right direction. That doesn’t mean there’s not unfinished business,” said Perez.
Analysts said the Fed will also be watching carefully to see what Britain's decision to depart the E.U. might mean for the U.S. economy. In minutes from a June 14-15 meeting published earlier this week, the Fed said that it would be “prudent” to wait for data on the aftereffects of the Brexit vote before deciding to adjust rates.
Britain's exit from the E.U. continues to pose a near term risk in the financial sector, with investors especially eyeing weak Italian banks. Fears about the effects of Brexit “could mean that weaknesses elsewhere are exploited and exposed, and that could spark a deeper crises elsewhere,” said Joseph Lake, director of global forecasting at the Economic Intelligence Unit. “That’s why we think everyone will keep their powder dry in the next few months.”
Economists say the Brexit vote threatens to trigger a recession in Britain and perhaps the E.U. next year, an event which could weigh on U.S. exports and consumer confidence -- or perhaps worse damage on the European continent.
Given these risks, the Fed is likely to proceed cautiously in raising U.S. interest rates, analysts said. Harry Holzer, former chief economist of the U.S. Department of Labor, said the data likely eliminated one major source of caution for the Fed. “There remain some other sources of concern, but the job market is not one of them," he said.