State of the Union: June jobs report portends a labor market slow down.
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The June jobs report is here.
The U.S. Department of Labor claims that last month American employers added 206,000 jobs. The additional 206,000 jobs exceeded economists’ prediction of 189,000. Private sector job growth, however, fell short of the 160,000 jobs forecast with the addition of 136,000 jobs. Government jobs, which increased by 70,000, picked up the slack.
Nevertheless, a downward revision could be coming in the future. The Labor Department revised April and May’s job growth numbers down by a combined 111,000 jobs. April’s job growth went from 165,000 to 108,000, a drop of 57,000. May, meanwhile, had its job numbers revised from 272,000 to 218,000—54,000 fewer jobs.
Even with the Labor Department’s revisions, June’s job report marked a slight hiring slow down from May. June’s job report and the downward revisions for April and May show that the three-month average for private-sector hiring was just over 145,000—the slowest private-sector hiring rate since the start of Covid-19.
Meanwhile, June saw the unemployment rate increase by a tenth of a percent, from 4 percent to 4.1 percent, which is fairly low but still the highest rate of unemployment since November 2021. Economists predicted no change in the unemployment rate. The increase, however, is largely due to the 277,000 people who re-entered the labor market and began looking for work in June.
Wages, on the other hand, matched economic forecasts. In June, average hourly earnings rose 0.3 percent, whereas the twelve-month wage growth remained at 3.9 percent—the lowest since June 2021.
Though the job market appears to be heading for a slowdown, the numbers are fairly strong given the high interest rate environment. Which is why the Federal Reserve will be paying close attention to the June jobs report and the slowdown it portends.
While the Fed has taken a soft approach to rectifying the American economy’s struggles, June’s jobs report could potentially trigger an earlier than expected rate cut. Previously, Chairman Jerome Powell hinted that the Fed could act more quickly if job growth started to weaken. Yet, markets are predicting that a rate cut will come in September and not after the Fed’s meeting at the end of July.
The real question: Are these numbers good enough to save President Joe Biden come November? But an American economy that’s just limping along is not the president’s biggest worry at the moment.
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