The U.S. economy added 147,000 jobs in June, according to the Labor Department, while the unemployment rate edged up to 4.2%. The figures point to a labor market that is still expanding, but showing signs of gradual cooling.

The latest report came in stronger than some analysts had expected on hiring, even as the higher jobless rate signaled more Americans were looking for work or finding it harder to secure positions. The mixed data will likely shape debate over how quickly the Federal Reserve should move on interest rates.

Economists often watch monthly payroll growth and unemployment together to gauge whether the labor market is holding steady or beginning to soften. June's numbers suggest the U.S. job market remains resilient, but not without pressure points.

The report is expected to factor into market expectations for the Fed's next policy decision, as officials balance inflation concerns against signs of slowing momentum in parts of the economy.