NEW YORK (Reuters) -U.S. job growth in June rose above expectations, while the unemployment rate fell, suggesting the labor market is stable.

Nonfarm payrolls increased by 147,000 jobs in June, after rising 144,000 in May, the Labor Department showed on Thursday. Economists polled by Reuters had forecast 110,000 jobs added last month.

The unemployment rate fell to 4.1% in June from 4.2% in the previous month.

On Wednesday, the ADP National Employment Report showed private payrolls unexpectedly fell in June, the first drop in more than two years.

MARKET REACTION

STOCKS: S&P E-minis gained and were up 0.27%

BONDS: The yield on benchmark U.S. 10-year notesrose 6.7 basis points at 4.3359% and the two-year note yield climbed 12 basis points to 3.8717%

FOREX: The dollar advanced against major currency pairs

COMMENTS:

JIM BAIRD, CHIEF INVESTMENT OFFICER, PLANTE MORAN FINANCIAL ADVISORS, SOUTHFIELD, MICHIGAN:

"The fears around the softer labor markets to this point have continued to be worse than the reality. The job market appears to be hanging in there. I'd say that you have to look at the next layer of the data and when you see the pretty marked slowdown in job creation in the private sector, there is still a cautionary note there."

"The fact that the headline number was as strong as it was, was largely attributable to the big increase in state and local government jobs, particularly in education. I don't think there's any question that you're still seeing a softer hiring environment. Companies may not be laying off in mass yet, but they're certainly still in a little bit of a holding pattern in terms of hiring as they await greater clarity on the trade and tax front."

SIMON DANGOOR, HEAD OF FIXED INCOME MACRO STRATEGIES, GOLDMAN SACHS ASSET MANAGEMENT:

"Today's stronger jobs report confirms a still resilient U.S. labor market, defying, at least for now, the signs of weakness seen in some leading indicators. The FOMC's conviction that it should hold its wait-and-see stance while it braces for an acceleration in inflation over the summer will only be strengthened. But we still see a path to a resumption of the Fed's easing cycle later in the year should the summer acceleration in inflation prove more modest than expected, or the softening in the labor market exceed the relatively low thresholds implied by the dot plot."

JEFFREY ROACH, CHIEF ECONOMIST, LPL FINANCIAL, CHARLOTTE METRO:

"If businesses keep expanding payrolls like they've done so far this year, the Fed can comfortably sit in 'wait and see' mode at the upcoming policy meeting. Uncertainty around tariffs and trade have apparently not spooked businesses into shedding workers. One note of caution: the administration is still actively negotiating details with several major trading partners and the eventual business impacts are unknown.'

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK:

"Unemployment ticking down is also a surprise. The good news here is that hourly wages certainly are not getting out of hand. They're subdued at 0.2% and cooler than expected on a yearly basis."

"Apparently, the government has called back some of those laid off employees. Without government jobs, payrolls would have been anemic."

"That takes us back to a September rate cut. On the other hand, if inflation should pop up from the tariffs, then they would probably go even out further and wait for December. But things but things staying the way they are now, I think we'll get a rate cut in September. But I certainly rule out July."

BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN:

"It's nice to go into a holiday with a beat on the headline payroll number and wage gains positive, but moderate. The large increase in the number of discouraged workers is disappointing. This is after a sharp increase in job openings, so there's a disconnect between employers and potential employees that needs to be resolved. Those who have been without work the longest are also those having the hardest time finding work. With the diffusion index below 50, job gains are unfortunately narrowing."

DAVID LAUT, CHIEF INVESTMENT OFFICER, ABOUND FINANCIAL, GRANITE BAY, CALIFORNIA:

"Thursday's jobs report was stronger than expected, which shows that the resiliency we have been seeing in the economy over the past several months is still intact. We still expect the Federal Reserve to continue its wait and see approach on interest rates, pushing any potential rate cuts into the fourth quarter of this year."

(Compiled by the Global Finance & Markets Breaking News team)