Despite employment gains in June, the job market is showing signs of slowing, according to economic analysts.
Total nonfarm payroll employment increased by 206,000 in June, similar to the average monthly gain of 220,000 over the past 12 months. Meanwhile, the unemployment rate changed little at 4.1% in the same time frame, the U.S. Bureau of Labor Statistics reported.
Unemployment was higher this June than it was a year ago, when the jobless rate stood at 3.6%. Several industries saw gains, including government, health care, social assistance, and construction.
However, factoring in April and May revised job figures and inflationary data, a different picture emerges than could first be perceived.
“Similar to May, the headline gain in nonfarm payroll employment data in June does not tell the entire story,” commented Mike Fratantoni, SVP and chief economist for the Mortgage Bankers Association (MBA). “While the headline gain showed an increase of 206,000 jobs, more than one-third of that was a gain in government employment, largely a function of increases in state and local jobs. Although June’s increase was above our expectations, both April and May figures were revised down by a combined 111,000 jobs, marking the three-month average down to a 177,000 increase.”
Other aspects of the June data point to a slowing job market, however. Average hourly earnings for all employees on private nonfarm payrolls increased by 10 cents, or 0.3% in June. Over the past 12 months, average hourly earnings have slowed to an increase of 3.9%.
“Historically-speaking, this is still a tight job market,” Fratantoni said. “However, relative to more recent data, the job market is weakening. Inflation data showing more reductions for the next couple of months will be the most important evidence that the Federal Reserve needs to cut rates in September. The current job market data points in that direction once you read below the headline.”
Among the major worker groups, the unemployment rates for adult women (3.7%) and Asians (4.1%) increased in June. The jobless rates for adult men (3.8%), teenagers (12.1%),whites (3.5%), Blacks (6.3%), and Hispanics (4.9%) showed little or no change over the month.
The number of people unemployed on the long-term, for 27 weeks or more, rose by 166,000 to 1.5 million in June.
Among the different employment sectors, the government added 70,000 jobs in June, higher than the average monthly gain of 49,000 over the prior 12 months. Health care added 49,000 jobs in June, lower than the average monthly gain of 64,000 over the prior 12 months. Construction added 27,000 jobs in June, higher than the average monthly gain of 20,000 over the prior 12 months. Retail trade employment changed little in June (-9,000), after trending up earlier in the year. Furniture, home furnishings, electronics, and appliance retailers lost 6,000 jobs over the month, while warehouse clubs, supercenters, and other general merchandise retailers gained 5,000 jobs. Employment in professional and business services changed little in June (-17,000) and has shown little change over the year.
July’s employment data is set to be released Aug. 2.
