U.S. economy adds 206,000 jobs in June, unemployment rate ticks higher

• Job gains in the past two months were weaker than initially known: The Labor Department said there were a combined 111,000 fewer jobs added in April and May.

By the numbers: Government, health care and construction are among the sectors that added the most workers.

• Average hourly earnings, a gauge of how quickly pay is rising, were up 0.3% in June and up 3.9% compared to the same time last year.

What to watch: The Federal Reserve, which has held interest rates at a two-decade high for nearly a year, is watching the labor market closely for signs of weakness.

• Fed officials say they want further proof that inflation is definitively dissipating before cutting interest rates. But the state of the labor market will factor into that decision, too.

What they're saying: "We are well aware that if we go too soon, that we can undo the good work we've done in bringing down inflation," Fed chair Jerome Powell said earlier this week.

• "And if we go too late, we could unnecessarily undermine the recovery and expansion."