The U.S. economy added 224,000 jobs last month, blowing away consensus forecasts and appearing to diminish the urgency for the Federal Reserve to deliver an interest rate cut later this month.

As Wall Street economists tried to handicap Fed policy expectations, and stocks priced in the possibility of a less aggressive cut, some believe the unexpectedly strong number will keep the central bank’s powder dry.

Still, the blockbuster headline figure masked a few underlying weakness that give ammunition to both sides of the rate cut debate.

One of the more compelling downsides in an otherwise good report is that, a decade into a record-breaking expansion, displaced workers are still being lured back into the job pool.

The end result is an unemployment rate that edged up to 3.7%, and a labor participation rate that’s mired near a relatively weak 63%. The high-water mark for the current expansion was 65.5% in 2009. Meanwhile, average wages barely grew.

“The unemployment rate rose, wage growth is flattening out [and] there is still residual slack in the jobs market,” noted Ian Shepherdson, chief economist at Pantheon Macroeconomics.

“We tend to think July cuts are still more likely than not,” he added.

Ugly retail losses and sluggish manufacturing

In addition, April and May’s payrolls were revised down by 11,000 jobs, and key sectors of the economy are still struggling to create positions.

The most obvious bad news was in retail--which has seen a veritable job apocalypse over the last year. There have been 20% more store closings during the first half of this year than all of 2018, according to Coresight Research.

The sector shed around 6,000 jobs in June in its fifth straight month of decline. Some of those losses has been attributed to the waning “sugar high” of tax reform that boosted the economy for much of 2018.

“This is mostly a story of structural shift away from physical stores to online, but it also probably is due to the reversal of over-hiring last year when retail sales were temporarily boosted by the tax cuts,” said Jim O'Sullivan, chief U.S. economist at High Frequency Economics.

Amid a wide ranging trade dispute with major U.S. trading partners, President Donald Trump has complained about the strength of the U.S. dollar.

One likely reason for that complaint lies with Trump’s empathy for the manufacturing sector -- a major crux of his political support -- which is traditionally most sensitive to currency fluctuations. Workers there have shown surprising resilience in the face of retaliatory tariffs by the U.S. and China.

Although manufacturers added an impressive 14,000 jobs in June—rising from 3000 in the previous month to 17,000— the sector has seen marginal job growth overall in 2019.

With trade disputes still ranging, “the trend in manufacturing growth remains relatively soft amid global uncertainties,” said Oscar Munoz, TD Securities’ macro strategist.

-

Javier is an editor for Yahoo Finance. Follow Javier on Twitter: @TeflonGeek

Read the latest financial and business news from Yahoo Finance

Read more:

'Quietest in 20 years': Truckers feel chill of slowing US economy

How Trump's 'beautiful' tariffs are casting a shadow over trade policy

Trump walks back Mexico tariffs, promises relief for 'patriot farmers'

Bank of America CEO: 'We want a cashless society'

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.