July 8, 2016

June 2016 Employment Situation Summary: 287K Jobs Added, Unemployment Rate Increases to 4.0 Percent; May Written Down to 11,000

Filed under: Economy,Taxes & Government — Tom @ 9:00 am

From the Bureau of Labor Statistics, a supposed spike in employment, beating artificially low expectations of 175,000 – 180,000 which didn’t seem to take the Verizon strike into account (permanent link with all tables):

Total nonfarm payroll employment increased by 287,000 in June, and the unemployment rate rose to 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Job growth occurred in leisure and hospitality, health care and social assistance, and financial activities. Employment also increased in information, mostly reflecting the return of workers from a strike.

Household Survey Data

The unemployment rate increased by 0.2 percentage point to 4.9 percent in June, and the number of unemployed persons increased by 347,000 to 7.8 million. These increases largely offset declines in May and brought both measures back in line with levels that had prevailed from August 2015 to April.

Among the major worker groups, the unemployment rates for adult women (4.5 percent) and Whites (4.4 percent) rose in June. The rates for adult men (4.5 percent), teenagers (16.0 percent), Blacks (8.6 percent), Asians (3.5 percent), and Hispanics
(5.8 percent) showed little or no change.

The number of persons unemployed less than 5 weeks increased by 211,000 in June, following a decrease in the prior month. At 2.0 million, the number of long-term unemployed (those jobless for 27 weeks or more) changed little in June and accounted
for 25.8 percent of the unemployed.

… Both the labor force participation rate, at 62.7 percent, and the employment-population
ratio, at 59.6 percent, changed little in June.

… Establishment Survey Data

Total nonfarm payroll employment increased by 287,000 in June, after changing little in May (+11,000). In June, job growth occurred in leisure and hospitality, health care and social assistance, and financial activities. Employment also rose in
information, largely reflecting the return of workers from a strike.

Leisure and hospitality added 59,000 jobs in June, following little employment change in the prior month. In June, employment increased in performing arts and spectator sports (+14,000), after edging down in May. Employment in food services and drinking places changed little over the month (+22,000). Job gains in leisure and hospitality have averaged 27,000 per month thus far this year, down from an average of 37,000 in 2015, reflecting slower job growth in food services and drinking places.

Health care and social assistance added 58,000 jobs in June. Health care employment increased by 39,000 over the month. Job gains occurred in ambulatory health care services (+19,000) and hospitals (+15,000), about in line with average monthly gains
over the prior 12 months in each industry. Within social assistance, child day care services added 15,000 jobs in June.

Employment in financial activities rose by 16,000 in June and has risen by 163,000 over the year.

Employment in information increased by 44,000 in June. Employment rose in telecommunications (+28,000), largely reflecting the return of workers from a strike. Employment increased in motion picture and sound recording industries (+11,000), after a decrease of similar magnitude in May.

Employment in professional and business services continued to trend up in June (+38,000). Thus far this year, the industry has added an average of 30,000 jobs per month, compared with an average monthly gain of 52,000 in 2015.

Employment in retail trade edged up by 30,000 in June, after changing little over the prior 2 months. In June, job gains occurred in general merchandise stores (+9,000) and in health and personal care stores (+5,000). Retail trade has added 313,000 jobs over the year.

Employment in mining continued to trend down in June (-6,000). Since reaching a peak in September 2014, mining has lost 211,000 jobs.

Employment in other major industries, including construction, manufacturing, wholesale trade, transportation and warehousing, and government, showed little or no change in June.

In June, the average workweek for all employees on private nonfarm payrolls was 34.4 hours for the fifth consecutive month. The manufacturing workweek (40.7 hours) and manufacturing overtime (3.3 hours) were also unchanged over the month. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.6 hours.

In June, average hourly earnings for all employees on private nonfarm payrolls edged up (+2 cents) to $25.61, following a 6-cent increase in May. Over the year, average hourly earnings have risen by 2.6 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $21.51 in June.

The change in total nonfarm payroll employment for April was revised from +123,000 to +144,000, and the change for May was revised from +38,000 to +11,000. With these revisions, employment gains in April and May combined were 6,000 less, on net, than previously reported. Over the past 3 months, job gains have averaged 147,000 per month.

More later, after a closer look. …

Not seasonally adjusted results: Following the worst May performance since the recession, June’s raw results were strong:


June’s raw job additions overall were the most added in a June since 1999, when 726,000 raw jobs were added, while private-sector additions were the highest since 2005′s 1.114 million private-sector job adds. In each instance, you could easily argue that the seasonally adjusted result should have been 100,000 to 150,000 higher. Readers may recall that I suggested in May, as did others, that one could argue that the seasonally adjusted figures probably should have been about 70,000 lower than reported.

If I would have had the chance to benchmark June, I would have said the that the economy needed to add 650,000 jobs overall, and 1.05 million in the private sector. Both of June’s raw numbers (682K and 1.086 million, respectively) exceeded those after-the-fact benchmarks.

It’s hard to believe that May was really as bad as reported, and Mark Zandi at Moody’s gave a reason why it may have been inaccurate in yesterday’s ADP conference call, namely that company participation in the underlying surveys was unusually low. That said, it’s also hard to believe that June was as strong as reported today. Zandi’s explanation notwithstanding, it’s awfully convenient to have a strong jobs number heading into the Democratic convention.

Also note that, as of now and pending another revision next month, the economy reportedly lost private-sector jobs in May for the first time since February 2010.


UPDATE: Other notes (references are to seasonally adjusted figures unless otherwise indicated) —

  • The participation rate edged up and the employment-population ration went down by 0.1 points, respectively.
  • The Household Survey shows that employment grew by only 67,000. Also, not seasonally adjusted employment only increased by 396,000 in June (compared to the 682,000 in the Establishment Survey). Looking back further, Household Survey employment is up by only 23,000 since February, after increasing by 1.877 million during the previous four months. Say what?
  • The civilian labor force, at 158.88 million, is slightly below where it was in February (158.89 million). However, on a raw basis, the labor force increase by 1.335 million from May to June, blowing away what we’ve seen in previous years. This seems to have occurred because the change from April to May was historically very low. So the two results seem to offset each other.
  • The volatile full-time/part-time numbers showed FT employment up by 451K and PT employment down by 491K. Yes, that’s a net decrease. Going back a bit further, FT employment since February is up by 380K and PT employment is down by 408K. Yeah, that’s also a net decrease over four months.
  • We keep on hearing that wages are rising. Mark Zandi trumpeted that claim once again yesterday’s ADP conference call. Too bad the numbers don’t support it. Hourly earnings, at $25.61, are up just 8 cents in the past two months. That’s a 0.3 percent increase, or less than 2 percent annualized. Average weekly earnings, at $880.98, is only up $2.83 in the past five months, an annual rate of 0.77 percent.

Overall: Unless July proves otherwise, it seems safe to say that the economy is clipping along at a 150,000 per month seasonally adjusted jobs added pace, that May’s weakness and June’s strength offset each other, and that there’s no compelling reason to believe that June’s strong numbers presage unusual strength going forward.



  1. Related to the incredibly tepid employment growth, I compared the non-adjusted employment-population ratio growth from January through June for my Hot Air guest post. At +0.93 percentage point, this year was the 7th-weakest since 1983. I forgot to mention last year was the 8th-weakest.

    Using the February-June metric makes things worse; only 2001 and 2009 had less employment growth between February and June since the 1981/1982 recession ended.

    Comment by steveegg — July 8, 2016 @ 2:55 pm

  2. Good show. Meant to look at that yesterday. Unbelievable swings in May and June, but the five-month period of most positive non-adjusted growth occurring in any year has by your account been really weak. Somewhat surprised that 2008 wasn’t also weaker.

    Comment by Tom — July 9, 2016 @ 5:30 pm

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