The labor market began to ease in June, with 206,000 jobs added to the US economy last month, according to new data from the Bureau of Labor Statistics (BLS). This figure aligns closely with economists’ expectations for the month, reflecting a slight cooling compared to May, when the economy added a revised 218,000 jobs.

The unemployment rate in June rose to 4.1%, a 0.1% increase from May, marking the first time it has exceeded 4% in over two years.

Earlier data this week suggested a cooling labor market. Payroll firm ADP reported that private employers added 150,000 jobs in June, down from 157,000 in May. Additionally, executive outplacement firm Challenger, Gray & Christmas reported 48,786 job cuts in June, a decrease from 63,816 in May but still a nearly 20% increase compared to June of last year.

The monthly jobs report, released on the first Friday of every month, is closely watched by Wall Street, eager to see a drop in interest rates, and in Washington, where strong hiring has been a rare bright spot for the Biden administration amid poor polling on its economic policies.

Alongside inflation figures, which are released later in the month, the Federal Reserve uses job data to assess whether the economy is cooling and ready for interest rate cuts. Last month, Fed officials kept rates at a two-decade high of around 5.3%, where they have been for nearly a year, aiming to bring inflation down to 2%. In May, inflation stood at 3.4%, down from its peak of 9.1% in June 2022 but still above the Fed’s target rate.

Minutes from the Fed’s last meeting, released on Wednesday, indicated that the central bank is awaiting “additional favorable data” before making rate cuts. However, while working to reduce inflation, the Fed must ensure the labor market doesn’t cool too much. Earlier this week, Fed Chair Jerome Powell stated at an event that the economy has “made a lot of progress” and has seen a “pretty substantial move toward better balance” in the labor market.

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