This Month’s Jobs Report Looks Better Than It Is
Today’s jobs report from the labor department showed an unemployment rate of 4.1% and the addition of 206,000 jobs to non-farm payrolls, in line with economists’ expectations. However, over a third of those jobs were government roles. Private-sector employers added 136,000 jobs, which were concentrated in three industries: healthcare, social assistance, and construction. In addition, the Bureau of Labor Statistics revised the previous two months’ jobs reports to reflect 111,000 fewer jobs added in April and May.
Wage growth also showed signs of softening over the past 12 months, increasing 3.9% from 4.1% the previous year. However, cooling inflation may mean that workers’ pay will go farther.
Meanwhile, the number of long-term unemployed increased by 166,000 to 1.5 million last month. The number of people who weren’t in the workforce but wanted to be declined by 483,000 to 5.2 million. Those individuals are not counted among the number of the official unemployed.
Other measures of job market health, including the labor force participation rate and the number of people employed part-time for economic reasons, were flat for June.
Weird stat of the month: Temporary help services declined by 49,000 jobs in June and 515,000 jobs from March 2022. See “What Experts Are Saying” for why this might be good news.
What It Means for Job Seekers
If you’ve spent any time on LinkedIn lately, you know that it’s a tough job market right now. It’s also an uneven one: layoffs have been concentrated in sectors like tech, media, retail, and finance, while job gains are focused in government, healthcare, and social assistance. (Note that we’re speaking broadly here: not every sector mentioned has consistent ups and downs each month.)
As ADP chief economist Nela Richardson puts it: “Job growth has been solid, but not broad-based.”
Payrolls processor ADP also releases a monthly jobs report. Typically, this report differs from the BLS version, in part because it only captures private-sector jobs. This month, however, the ADP report and the BLS report tell a similar story: weak growth in private payrolls, focused on a very few sectors.
What Experts Are Saying
“The June rise in nonfarm payroll was slightly higher than expectations, but the big downward revisions to April and May are the story. Job market is slowing down.” -Kathy Jones, chief fixed income strategist, Charles Schwab, via NBC News
“The June data is brimming with signs of a slowing labor market: rising unemployment, slowing job gains, and moderating wage growth. Today’s report shows the temperature of the labor market is still pleasant, but if current trends continue the weather could get uncomfortably cold.” -Nick Bunker, economic research director for North America at Indeed Hiring Lab, via MarketWatch
“The uptick in the unemployment rate doesn’t quite trigger the ‘Sahm Rule,’ a rule of thumb that has historically indicated a recession has begun. But if historical patterns hold, the recent increase is sufficient to suggest that recession risks are elevated.” -Ben Casselman, The New York Times
“Tom Simons, a U.S. economist at Jefferies, has a persuasive take on why the fall in temp jobs might not herald a downturn: ‘Rather than indicating a big decline in labor market demand, we view this data as a sign that workers themselves have better opportunities for full-time employment such that they do not have to go to a temp agency.’” -Lydia DePillis, The New York Times
“Teen summer jobs are back! 37.3 percent of 16-to-19-year-olds were working in June, the highest rate of employment in that month since 2007. Although that pales in comparison to the record of 55.3 percent in June 1978.” -Ben Casselman, The New York Times
Just Give Me the Data, Please
The Employment Situation Summary by the numbers:
Total nonfarm employment: +206,000 jobs
Unemployment rate: 4.1%
Long-term unemployed: +166,000 to 1.5 million
Labor force participation rate: 62.6%
Employment-population ratio: 60.1%
People employed part-time for economic reasons: 4.2 million
Average hourly earnings: Increased by 10 cents (0.3%) to $35
Industries that added jobs:
Government (+70,000 jobs)
Healthcare (+49,000 jobs)
Social assistance (+34,000 jobs)
Construction (+27,000 jobs)
Industries that showed little change in employment:
Retail trade
Wholesale trade
Professional and business services
Mining, quarrying, and oil and gas extraction
Manufacturing
Transportation and warehousing
Information
Financial activities
Leisure and hospitality
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