The latest Employment Situation Report from the Bureau of Labor Statistics (BLS) contains terrific news about the U.S. total jobs gain in June, +287,000 month to month.
Thank goodness there is that latest reading to focus on, though, since May’s comparable figure, which was originally compiled as a disappointingly weak +38,000, has now been revised to an almost vanishing +11,000.
Combining May and June, the total number of jobs in the U.S. economy has risen by +298,000 over the past two periods, or a monthly average of +149,000. That doesn’t meet the threshold of +180,000 that separates the good from the mediocre.
In June, there were more people looking for work, which lifted the participation rate slightly to 62.7% from 62.6%. As a consequence, the unemployment rate rose to 4.9% from 4.7%.
Table A-9 of the Employment Situation Report includes a set of numbers that doesn’t usually receive a lot of attention, but is worthy of mention at this time.
The ‘household’ (i.e., as opposed to ‘employer’) labor market survey of the BLS calculates that there has been a 2.5 million nominal increase, year over year, in the number of full-time positions in the U.S., while part-time work has stayed mainly flat.
Full-time jobs are usually considered better for the economy since they are more stable and come with higher rates of compensation. Those two pluses allow for more consumer spending and purchases of bigger ticket items.
Employment economy-wide may have shot up nicely in June, but construction didn’t benefit from the surge. Its number of on-site workers, at 6.643 million, stayed even.
Construction did, however, continue to lead all major sub-sectors with respect to year-over-year employment increase. It’s +3.4% gain stayed a stride ahead of the +3.0% for second-place ‘education and health’ and it was twice as fast as the +1.7% for all jobs.
Also, construction in June saw a further tightening of its unemployment rate. It fell to only 4.6% from 5.2% in May. The last time the construction sector’s jobless figure was as low occurred nearly a decade ago, in October 2006, when it was 4.5%.
The question on everybody’s mind is, “Are wage rates climbing?” In short, there’s not much of a story to be told. There’s a +3.0% ceiling to crash through and that still isn’t happening.
For all workers in the economy as a whole, June’s year-over-year increase in average hourly earnings was +2.6%; and for average weekly earnings, +2.3%. For the construction sector specifically, the comparable gains were +2.8% and +2.5%.
For ‘production and nonsupervisory’ employees, both average hourly and average weekly earnings were +2.4%. In construction alone, average hourly earnings were +2.7% and average weekly earnings, +2.4% (i.e., the same as for all workers).
If construction didn’t contribute to the 287,000 month-to-month total jobs rise, which sectors did?
There were two that really picked up the hiring pace, ‘education and health services’ and ‘leisure and hospitality’. They tied with +59,000 jobs each.
In the former, virtually all of the additional staffing was in ‘health care and social services’ (+58,000). Hospitals added to their payrolls by +15,000. Just as important, ‘child day care services’ recorded a personnel increase of the same magnitude, +15,000.
Within ‘leisure and hospitality’, it was ‘food services and drinking places’ (+22,000) that were the trend-setters in hiring.
‘Information services’ displayed wild swings in employment in May and June, mainly in its telecommunications sub-sector. A drop of 38,000 in May was more than counterbalanced by an uptick of 44,000 in June. A strike at Verizon played havoc with the sector’s total jobs number in the earlier month, then a settlement restored it in the most recent period.
Retail trade employment in June was +30,000, but there was only modest movement at the outlets most important for the construction sector, ‘building material and garden supply stores’, +4,000.
The public sector leapt back into the hiring game with considerable enthusiasm in June, taking on 22,000 more workers. The bulge didn’t come at either the federal (+2,000) or state (+3,000) levels. Rather it was local government that binged (+17,000). Year-to-date employment by all levels of government is +79,000.
At +14,000 jobs, manufacturing had its second-best hiring month of this year in June. Only January, at +18,000, was superior. Just the same, total employment in the sector has declined by 24,000 jobs so far this year.
The unemployment rate in the ‘mining, quarrying and oil and gas extraction sectors’ worsened again in June to 11.5% from 11.1% in May. To fully appreciate how badly this sector has been mauled by the plummet in crude oil prices globally, consider that two years ago, in June 2014, its jobless rate was 2.5%.
At least there’s consolation to be taken from the fact that oil prices, of late, have moved back up from their terrible trough levels at the start of this year.
Year-over-year U.S. total employment in June was +1.7%, with ‘private services’ forging ahead faster, +2.3%. ‘Private services’ comprise 71% of total nonfarm employment.
The pecking order, from fastest to slowest, among services sub-sectors was: ‘education and health’, +3.0% year over year; ‘leisure and hospitality’, +2.7%; ‘professional and business services’, +2.5% retail, +2.0%; ‘financial activities’, also +2.0%; ‘information services’, +1.3%; ‘transportation and warehousing’, +0.8%; and government, +0.6%;
Be prepared for some heightened speculation that the Federal Reserve, noting June’s strong month-to-month employment advance, may want to move ahead soon with another rate hike.
Such conjecture seems hasty to me, given the new uncertainty in the world trading environment caused by the U.K.’s Brexit vote.
Plus the Fed is sure to be processing the observation that America’s monthly jobs increase so far this year (i.e., through the first half) has dropped by 50,000 compared with the same time frame last year.
2015’s average monthly jobs increase January to June was +220,000. This year’s comparable figure has been +172,000.