Economy Adds 213K jobs in June; Unemployment Rate Up to 4.0% but Earnings Increase Slows

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Number of payroll jobs INCREASED 213,000 in June;
  • Unemployment rate in June INCREASED to 4.0 percent, the first month-month increase since last August;
  • Average weekly earnings ROSE $1.72 to $930.81, a 2.7 percent year-year gain, down from a 3.0 percent year-year gain in May;
  • Average hourly earnings GREW 5¢, in June a 2.7 percent annual increase
  • Private sector jobs INCREASED 202,000;
  • Number of multiple jobholders grew 177,000, 83.1 percent of total increase in jobs
  • Prior month job totals REVISED a net 37,000: UP 21,000 in May to a growth of 244,000 jobs (from 223,000) UP in April to a gain of 175,000 (from the last report of a 159,000 increase);
  • The number of persons unemployed ROSE 499,000 as 204,000 individuals re-entered the labor force as “unemployed;”
  • Number of long-term unemployed (27 weeks or longer) ROSE 289,000 largest month-month increase since March 2010;
  • The number of person employed ROSE, by 102,000;
  • Average weekly hours REMAINED at 34.5 in June;
  • Labor force – ROSE 601,000 in June;
  • The number of persons NOT in the labor force FELL 413,000; labor force participation rate ROSE2 percentage points to 62.9 percent;
  • Employment-Population ratio REMAINED at 60.4 percent,
  • Number of retail jobs FELL 21,600, one of only two sectors to lose jobs (Utility jobs dipped 300);
  • Temporary jobs and part-time grew a combined 154,300;

Trends:

  • In the first six months of the year, the economy added 1.29 million jobs compared with 1.1 million in the first six months of 2017;
  • Number of full-time jobs FELL 89,000 in June, after a 904,0000 gain in May;
  • The month-month increase in the number of persons unemployed was the largest since November 2010, when the ranks of unemployed swelled by 565,000
  • Part-time jobs represented 17.4.0 percent of employment in June, up 0.1 percentage points from May;

Data Source Bureau of Labor Statistics

Image result for employment situation reportThen June Employment Situation report from the Bureau of Labor Statistics has almost as many warning signs as positive points.

While there is certainly good news in the month job growth, it is offset by the data showing a good chunk of those new jobs went to individual who already had jobs (multiple job holders),

On the surface it appears the strong market report in May which showed a drop in the unemployment rate drew individuals back into the labor force which led directly to an increase in the June unemployment rate.

But the unemployment rate rose without the re-entrants to the ranks of unemployed, up from 2.6 percent in May to 2.8 percent in June, matching precisely the increase in the overall unemployment rate.

At the same time the “long-term” unemployment capturing those out-of-work for 27 weeks or more as a percentage of the entire labor force rose to 0.9 percent in June from 0.7 percent in May. (The headline unemployment rate is also calculated as a percentage of the total labor force.)

The month’s drop in retail employment 21,600, was the steepest since December and suggests the tax cut – which kicked in in February with a lowering of withholding rates putting more money is the pockets of wage-earners – has not had the expected stimulative impact on the economy writ large.

Indeed, the improved hiring picture hasn’t had much of an impact on earnings which rose 2,7 percent year-year in June. Though the labor market remains tight – at least on paper – employers don’t appear to be trying to lure new hires with better pay. The number of “job leavers” those who are unemployed because they voluntarily left one job to get another, dipped in 41,000 June.

Perhaps the brightest view of the June report came in the widespread increase in jobs from an industry perspective. Retail trade and the utilities sector were the only two to show a drop in jobs in June.

The manufacturing sector showed its strongest month-month increase of the year adding 36,000 jobs. The construction sector added 13,000 jobs but jobs involving construction of residential homes added just 4,000 jobs reflecting the weak home sales market and the price increases for new homes stemming from increased tariffs. Lumber priced have been particularly affected by tariff increases.

Hear Mark Lieberman every Friday morning at 6:20 am on The Morning Briefing on POTUS on Sirius-XM 124. You can follow Mark Lieberman on Twitter at @foxeconomics.

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