The US economy added slightly more jobs than expected in June, but the unemployment rate rose above consensus expectations.

The closely watched employment report from the US Labor Department’s Bureau of Labor Statistics revealed that US Nonfarm payrolls increased by 206,000 jobs in June, surpassing the expected rise of 190,000 and against May’s downwardly revised figure of 218,000 from 272,000.

The report also showed that the unemployment rate rose to 4.1% from 4.0% in May, in line with expectations. Average hourly earnings increased by 0.3% month-on-month after a 0.4% rise in May, and the annualized figure showed a 3.9% rise in June compared to a 4.1% increase the previous month, meeting expectations.

US job growth slowed to a still-healthy pace in June, with the unemployment rate rising to 4.1%. This increases the chances that the Federal Reserve can bring inflation under control without significantly raising the risk of a recession.

Analysts view the June job growth pace as healthy despite the slowdown, with the rising unemployment rate signaling resilience in the labor sector and boosting hopes that the Federal Reserve can tame inflation without tipping the economy into recession.

Combined with the moderation in prices in May, the report confirms that the disinflationary trend is back on track after the inflation surge in the first quarter. This could boost the Fed’s confidence in the inflation outlook and bring it a step closer to cutting rates later this year, after maintaining its benchmark overnight interest rate in the 5.25%-5.50% range for a year.

The minutes of the central bank’s last meeting, released earlier this week, showed policymakers acknowledged that the economy appeared to be slowing and that price pressures were diminishing.