Employmnet Situation – June 2016

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May was indeed an odd outlier in what is otherwise a still favorable trend for the labor market. June nonfarm payrolls surged a much stronger-than-expected 287,000 vs a downward revised and recovery low increase of only 11,000 in May. June’s strength is led by a 38,000 gain for professional & business services, a closely watched area that is especially sensitive to changes in labor demand. Telecommunications, which fell 32,000 in May during the Verizon strike, rose 28,000 in a positive reversal for June. Manufacturing shows a rare gain and a sizable one at 14,000. Other industries posting gains include retail, government and also finance.

The unemployment rate rose 2 tenths to 4.9 percent but reflects strength, not weakness, in the labor market as discouraged workers, who stopped looking for work in May, re-entered the labor force in June. Other readings are mixed with average hourly earnings up only 0.1 percent for a plus 2.6 percent year-on-year rate and with the workweek unchanged at 34.4 hours. Data on factory hours are flat.

The payroll gain in June is what is striking in this report. Yet smoothing the big ups and downs, second-quarter payroll growth averaged a monthly 147,300 vs a more substantial 195,700 in the first quarter. The labor market is solid but perhaps slowing, this and still subpar wage growth (not to mention Brexit) may not be pointing to any urgency for a new Federal Reserve rate hike.

By |2016-11-17T15:45:57+00:00July 12th, 2016|Categories: Lagging|Tags: , |0 Comments

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