July 7, 2017

June Employment Situation Summary: 222K Jobs Added, Unemployment Rate Increases to 4.4 Percent; Prior-Month Revisions Add 47K; 1.7 Million Full-Time Jobs Added in Past Six Months

Filed under: Economy,Taxes & Government — Tom @ 9:19 am

Didn’t have time for advance prep today, so here we go from the Bureau of Labor Statistics (full HTML permanent link):

Total nonfarm payroll employment increased by 222,000 in June, and the unemployment rate was little changed at 4.4 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in health care, social assistance, financial activities, and mining.

Household Survey Data

In June, the unemployment rate, at 4.4 percent, and the number of unemployed persons, at 7.0 million, were little changed. Since January, the unemployment rate and the number of unemployed are down by 0.4 percentage point and 658,000, respectively.

Among the major worker groups, the unemployment rates for adult men (4.0 percent), adult women (4.0 percent), teenagers (13.3 percent), Whites (3.8 percent), Blacks (7.1 percent), Asians (3.6 percent), and Hispanics (4.8 percent) showed little or no change in June.

The number of long-term unemployed (those jobless for 27 weeks or more) was unchanged at 1.7 million in June and accounted for 24.3 percent of the unemployed. Over the year, the number of long-term unemployed was down by 322,000.

The labor force participation rate, at 62.8 percent, changed little in June and has shown no clear trend over the past year. The employment-population ratio (60.1 percent) was also little changed in June and has held fairly steady thus far this year.

Establishment Survey Data

Total nonfarm payroll employment increased by 222,000 in June. Employment rose in health care, social assistance, financial activities, and mining. Employment growth has averaged 180,000 per month thus far this year, in line with the average monthly gain of 187,000 in 2016.

In June, health care added 37,000 jobs. Employment increased in ambulatory health care services (+26,000) and hospitals (+12,000). Health care has added an average of 24,000 jobs per month in the first half of 2017, compared with a monthly average of 32,000 jobs in 2016.

Social assistance employment increased by 23,000 in June. Within the industry, employment continued to trend up in individual and family services (+12,000) and in child day care services (+8,000). Social assistance has added 115,000 jobs over the last 12 months.

Employment in financial activities rose by 17,000 in June and has grown by 169,000 over the year. Securities, commodity contracts, and investments added 5,000 jobs over the month.

In June, mining employment grew by 8,000, with most of the growth in support activities for mining (+7,000). Since a recent employment low in October 2016, mining has added 56,000 jobs.

Employment in professional and business services continued to trend up in June (+35,000) and has grown by 624,000 over the last 12 months.

Employment in food services and drinking places also continued on an upward trend in June (+29,000). The industry has added 277,000 jobs over the year.

Employment in other major industries, including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, and government, showed little change over the month.

The average workweek for all employees on private nonfarm payrolls rose by 0.1 hour to 34.5 hours in June. In manufacturing, the workweek edged up by 0.1 hour to 40.8 hours,
while overtime was unchanged at 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls rose by 0.1 hour to 33.7 hours.

In June, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.25. Over the year, average hourly earnings have risen by 63 cents, or 2.5 percent. In June, average hourly earnings of private-sector production and nonsupervisory
employees increased by 4 cents to $22.03.

The change in total nonfarm payroll employment for April was revised up from +174,000 to +207,000, and the change for May was revised up from +138,000 to +152,000. With these revisions, employment gains in April and May combined were 47,000 more than previously reported. Over the past 3 months, job gains have averaged 194,000 per month.

Well, we got a partial answer to the question I raised last month, which was how BLS could show only 800K jobs private-sector jobs added during the first five months of this year, while ADP was at 1.2 million.

Now they’re converging. Previous ADP months were pulled down by almost 50K yesterday, but BLS (private-sector portion) came up by today by 33K.

A look at the unadjusted numbers and other thoughts will arrive throughout the morning. But the immediate takeaway is that the labor force grew by 361K and that about two-thirds of them (net) found employment.

Not seasonally adjusted figures and seasonal conversions

Total nonfarm job additions were 599K, which is lower than the 657K seen in June 2016 but otherwise the best since 2005. The seasonal conversion is reasonable in the context of June 2016, but looks understated compared to the previous several Junes by at least 50K.

The story is similar in the private sector, where 1.01 million jobs were added. That’s lower than last year’s 1.089 million but otherwise the best since 2005. Again, the seasonal conversion is reasonable in the context of June 2016, but looks understated compared to the previous several Junes by at least 50K.

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

  • As noted, the unemployment rate went up for the “right” reason. 361K people joined the workforce, and a net 245K of them found work.
  • The black unemployment rate dropped to 7.1 percent. That’s good news in the sense that it’s the lowest rate since the 7.0 percent seen in April 2000. But it came down from 7.5 percent in May because the black workforce shrank, which is not helpful.
  • After a reversal last month, full-time employment increased by 355K. Meanwhile, part-time employment decreased by 224K. Year-to-date full-time employment has increased by 1.727 million. If that pace to 3.45 million is sustained for the next six months (obviously big if), 2017 will be the second-best year for number of full-time job adds ever, with the only exception being 1983 (other years have higher percentage additions).
  • The last time weekly hours were at 34.5 was in early 2016. In the 12 years BLS has tracked this stat, it’s never been higher than 34.6. There’s a reasonable chance that this number will head higher than that previous record in future months — IF Obamacare’s employer mandate goes away.
  • Though it would be nice to see hourly pay increase at a faster rate, at least the weekly hours increase drove a 0.5 percent increase in weekly pay.

On balance, this is a fairly strong report — though Zero Hedge’s points about the concentration of job adds in lower-paying sectors and the hard-to-justify increase in government employment shouldn’t be ignored.

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2 Comments

  1. The Not in Labor Force #s look encouraging:

    https://data.bls.gov/timeseries/LNS15000000

    May 2017 – 94,983,000 June 2017 – 94,813,000

    170,000 reduction, very positive and good for the tax payers who will pay less for fewer people not contributing to society.

    Note that Unemployment is up from 6,572,000 to 7,250,000, a net increase of 670,000.

    What to make of that? A return to the pre-great recession churning of people between jobs as opposed to those stuck without jobs. So it is not necessarily bad news just the cushion is larger to say that NO work visas are needed to fill the gap. Establishment Republicans and Limousine Liberals hardest hit.

    https://www.bls.gov/regions/mid-atlantic/data/xg-tables/ro3fx9585.htm

    Comment by dscott — July 7, 2017 @ 10:11 am

  2. But Mark Zandi told me major labor force growth can’t occur (/sarc).

    Comment by Tom — July 7, 2017 @ 10:25 am

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