June Jobs Report Positive, But Not Spectacular
June's Jobs Report was healthy, but the economy still needs to do better.
Coming as it is the day after the 4th of July and in the middle of what many Americans are treating as a long weekend, it’s likely that today’s release of the June Jobs Report may be getting less attention than normal, but it was released nonetheless and, much like last month we ended up with another good-but-not-great report that shows that the economy seems to be growing in a slow but steady manner that is at least generating mildly good jobs numbers. At the very least, it would appear that we’ve broken the trend that we had seen over the previous three years where a strong winter/spring is followed by a slumping summer of minimal to no job market growth, and that alone is pretty good news. Looking at the topline numbers, net nonfarm payrolls increased by 195,000 while the unemployment rate remained steady at 7.6 percent. There are a few data points of potential concern in the today’s numbers, but on the whole this was a good report that, hopefully for those who still have to find work, is the indication of a new, much more positive trend:
So here’s how the Bureau of Labor Statistics put it:
The number of unemployed persons, at 11.8 million, and the unemployment rate, at 7.6 percent, were unchanged in June. Both measures have shown little change since February. (See table A-1.)
Among the major worker groups, the unemployment rate for adult women (6.8 percent) edged up in June, while the rates for adult men (7.0 percent), teenagers (24.0 percent), whites (6.6 percent), blacks (13.7 percent), and Hispanics (9.1 percent) showed little or no change. The jobless rate for Asians was 5.0 percent (not seasonally adjusted), down from 6.3 percent a year earlier. (See tables A-1, A-2, and A-3.)
In June, the number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 4.3 million. These individuals accounted for 36.7 percent of the unemployed. Over the past 12 months, the number of long-term unemployed has declined by 1.0 million. (See table A-12.)
The civilian labor force participation rate, at 63.5 percent, and the employment-population ratio, at 58.7 percent, changed little in June. Over the year, the labor force participation rate is down by 0.3 percentage point. (See table A-1.)
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 322,000 to 8.2 million in June. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. (See table A-8.)
And on the job creation side of the equation:
Total nonfarm payroll employment increased by 195,000 in June, in line with the average monthly gain of 182,000 over the prior 12 months. In June, job growth occurred in leisure and hospitality, professional and business services, retail trade, health care, and financial activities. (See table B-1.)
Leisure and hospitality added 75,000 jobs in June. Monthly job growth in this industry has averaged 55,000 thus far in 2013, almost twice the average gain of 30,000 per month in 2012. Within leisure and hospitality, employment in food services and drinking places continued to expand, increasing by 52,000 in June. Employment in the amusements, gambling, and recreation industry also continued to trend up in June (+19,000).
Employment in professional and business services rose by 53,000 in June. Job gains occurred in management and technical consulting services (+8,000) and in computer systems design and related services (+7,000). Employment continued to trend up in temporary help services (+10,000). Over the past year, professional and business services has added 624,000 jobs.
Retail trade employment increased by 37,000 in June. Within retail trade, employment increased by 9,000 in building material and garden supply stores and by 8,000 in motor vehicle and parts dealers. Employment in wholesale trade continued to trend up (+11,000).
Health care continued to add jobs in June, with a gain of 20,000. Within the industry, employment continued to trend up in ambulatory health care services (+13,000). A gain of 5,000 jobs in hospitals followed a loss of 8,000 jobs in May.
Employment in financial activities rose by 17,000 in June, with most of the increase occurring in credit intermediation (+6,000) and in insurance carriers and related activities (+6,000).
Federal government employment continued to trend down in June (-5,000) and has declined by 65,000 over the past 12 months.
Employment in most other major industries, including mining and logging, construction, manufacturing, and transportation and warehousing, showed little change in June.
In addition to these numbers, the jobs numbers for April were revised upward from 149,000 new jobs to 199,000 new jobs while the numbers for May were revised upward from 175,000 to 195,000. That puts average jobs growth for the three months making up the 2nd Quarter of 2013, pending revisions to June’s numbers that will come out over the next to months, at 196,000 per month compared to the 182,000 per month average for 2013 as a whole to date. While this is far better than what we’ve seen in the not too recent past, it’s worth noting that if we continued that 196,000 average going forward, it would still take until 2021, after two Presidential elections, before we would return to pre-recession employment levels. At 182,000 per month, it would quite obviously take longer than that. Another cautionary note can be found in U-6, the long term unemployment rate, which took a jump from 13.8% to 14.3% last month. Given the fact that labor force participation actually increased by a slight, though not entirely significant, amount, it’s not entirely clear why this happened or what it means for the future, but it’s something worth keeping an eye on.
In the media, CNBC is choosing to emphasize the positive but also pointed out that the growth wasn’t entirely what we’d call robust:, which may actually be good for the stock market if not the economy as a whole:
The numbers provided a mixed bag of news: While the actual employment level grew by 160,000, the unemployment ranks increased as well, by 17,000.
Those working part-time for economic reasons also jumped, growing 32,200 for the month.
That pushed a more encompassing count of unemployment that includes discouraged and underemployed from 13.8 percent to 14.3 percent.
Moreover, the quality of jobs was weak.
The bulk of the gains—75,000—came in the hospitality industry of bartending and waiters.
Professional and business services was the second-best growth area, adding 53,000 and retail grew 37,000.
“It’s so hard. Unless you know somebody you can’t get a job,” said Sharon MacGregor, 43, of Patterson, N.J.
MacGregor was laid off a year ago from her job at a medical education company and has struggled since to find a job that can help her make ends meet.
“Now that I’ve been unemployed for more than six months, I don’t feel like I’m even being considered,” she said. “Pay is so low. I know we’re not supposed to be choosy, but you have to live.”
The average duration of unemployment actually fell in June but remained elevated at 35.6 weeks.
While the numbers provided confirmation that employment gains continued pretty much apace with the past year or so, the Fed’s targeted growth level remains elusive and the routine of zero interest rates and the $85 billion a month of bond purchases likely will continue.
“We can expect the Fed to continue providing hints of tapering, while maintaining status quo with the current QE program,” said Todd Schoenberger, managing partner at LandColt Capital. “Overall, this report is remarkably bullish for stocks.”
The New York Times is slightly more circumspect:
The economy added 195,000 jobs in June, the Labor Department reported Friday morning, slightly more than analysts had been expecting and suggesting steady growth.
Wall Street has been feverishly awaiting the June employment report. Not only does it provide another indicator of overall economic strength, it also affects the timing of the Federal Reserve’s decision to start tapering a major part of its stimulus efforts.
A strong report increases the likelihood the central bank will start pulling back on its bond purchases as early as September, a prospect that has made some investors more cautious in recent weeks. On the other hand, signs of weakness in the labor market would likely prolong the Fed’s program of purchasing $85 billion in bonds per month.
Along with job creation, the Fed is closely watching unemployment levels. The unemployment rate, which is based on a separate survey from the one that tracks jobs, remained at 7.6 percent, unchanged from May.
The chairman of the Federal Reserve, Ben S. Bernanke, said two weeks ago he anticipated the bond-buying program would wrap up when the unemployment rate sinks to 7 percent. The Fed estimates that could happen by the middle of next year.
Despite signals from the Fed that the labor market is strong enough to handle a reduction in the stimulus, the pace of job creation has slowed in recent months.
Over the course of March, April and May, the economy added jobs at an average rate of 155,000 a month, down from the 233,000-a-month pace that prevailed in December, January and February.
While the economy has held up better than some analysts had expected in the face of tax increases and automatic cuts in federal spending this year, overall growth has been tepid. The economy grew at an annual rate of 1.8 percent in the first quarter, short of what’s needed to quickly lower the unemployment rate or reduce the ranks of the jobless.
Of course, the sequester was not in effect during the 1st Quarter of the year, so you can’t really ascribe the weak growth then to the sequester, although admittedly there may have been some anticipatory cutbacks going on at that time. During the bulk of the period that the sequester has been in effect, though, we’ve actually seen some of the best job growth that we’ve had in quite some time. Along with many other factors that others have cited, this suggests that the gloom and doom that was being tossed around in the months before the sequester went into effect in March was largely overblown.
This isn’t the kind of jobs report that its worth popping champagne corks over. That should be reserved for a time when we’re averaging at least 225,000-250,000 new jobs for month, and preferably more. But it’s respectable at the very least. Whether it’s sustainable is something we’ll have to wait to find out.
This would be a positive report if so many Americans weren’t unemployed or underemployed.
Steady as she goes.
Amazing that the economy is so resilient in the face of sequestration and lack of help from the federal or state governments.
Add the numbers up; the quality of jobs suck. Mostly minimum wage and entry level.
@ john425
Got data?
From the report:
That means that a little more than half of the jobs gained were in retail or hospitality, sectors that tend to be low wage-low benefit.
Yes, the slow steady recovery from the catastrophic crash of the financial and housing markets continues. Thank god we did not implement austerity and spending reduction actions in the months following the economic collapse.
Doug seem to have had to depart from his template-slow and disappointing economic recovery on Obama’s watch, studious avoidance of the reason why growth is so slow.Apparently job growth was too strong this time.
Doug still is silent on why growth has been slow-perhaps because he still believes in his austerian dogmas.
He does express some hope that sequestration won’t hamper economic growth. Unfortunately for that idea, the full effect of the sequestration will just he starting this month, with federal employees having to forgo one day of pay this week. No economist that I know of believes that this won’t hurt the economy.
My prediction is that growth will slow again in a month or two, and that the sequester will be to blame.
Which makes me think people have more disposable income, and that they are going out and spending it. That’s probably a good thing.
No change in the participation rate or the unemployment rate means no net improvement in the labor market. Don’t let headline numbers mislead you. Not mentioned here is that hourly compensation in Q1 2013 dropped 3.8%, the largest decrease since we started keeping records seventy-odd years ago. This is why growth primarily in retail and service is not a positive sign: there is a net shift from middle-income to low wage work occuring.
So what we’re seeing continues to be consistent with an employment situation which has not improved since the bulk of stimulus ran out at the end of 2009. Credit expansion in student loans and sub-prime auto financing is largely what is keeping the economy in nominal growth, but deliquencies and defaults are rising.
Yeah, the jobs are not good jobs.
So, ideally, where would we be seeing growth in higher level jobs? Among lawyers of whom we have too many and who are in part being replaced by Google and apps? Accountants and bookkeepers who are being replaced by Quicken? Machinists who are being replaced by precision tools run by computers? Assembly line workers to underbid third world workers and build cars for a generation that’s eschewing the car?
What are these wonder jobs we should be getting but aren’t? I’m not being facetious, I really don’t get what occupations we think we “should” see growing.
You can’t keep subtracting entire job categories through off-shoring and automation and not have it take a toll. And this has only just begun. The only reason fast food isn’t 90% automated is that we pay the workers slave wages so the flesh is cheaper than the steel to replace it. We create jobs for guys making less than it takes to sustain life, and if we pay them any more we’ll replace them with machines.
This is a really big thing happening in our civilization. This is a new paradigm coming up here. Maybe rather than reducing it to partisan bash-sessions we should think about what it means when our machines can replace an increasing number of us. Does anyone here doubt that McDonald’s has the technology to build a completely automated store using apps to take orders and machines to cook them? What jobs will magically appear to soak up all those workers?
If Romney had been elected we would have 80K a year jobs for all of them. It’s true.
Anjin won’t see the forest for the trees. From CNN Money:
The biggest job gains were in leisure and hospitality (up 75,000), professional and business services (up 53,000), and retail (up 37,000). Construction and manufacturing were little changed.
The number of people working part time because they couldn’t find a full-time position rose by 322,000 from the month before. Some experts also pointed out that many of the newly-created jobs are in low-wage sectors.
“Three quarters of these would qualify as low-quality jobs,” said J.J. Kinahan, chief strategist at TD Ameritrade.
I rather liked Iowahawk’s analysis of the report:
@Jenos Idanian:
Conservatives would like that, they’re good solid non-union Republican-type jobs.
@al-Ameda: I understand why you wouldn’t like those jobs. They actually require people to show up and produce stuff. And they don’t tend to be big Democratic donors, so screw ’em.
I learned a long while ago to be nice to the people who handle your food. And to be polite to people from all walks of life, ‘cuz you never know when or where or how you might see them again. I am not surprised that you never learned that lesson.
@Jenos Idanian #13: we’re. Not talking about the good people who work in those jobs, we’re talking about the type of jobs that conservatives seem to prefer – low wages, few benefits.
I always treat people involved in food service with respect, everyone should.
al-ibn alameda says: “… the type of jobs that conservatives seem to prefer – low wages, few benefits.”
So, it can be supposed that liberals prefer the opposite, namely docile serfs who get their bread and gruel from their commissars and must be grateful or they will be punished, eh?
@john425:
#1 – you do realize that “al-Ameda” refers to a street – “Alameda” – in the town where I grew up, and not to a Syrian relative or whatever you’re thinking of.
#2 – yes it can be inferred from my statement that Liberals prefer the opposite – high paying jobs with good benefits. Docile serfs? That is the conservative model, not the liberal model.
@ john425
I made a decent living in the hospitality industry for a long time. Had a lot of fun too. I’m a good enough bartender that I am confident I could make 70K a year at it now if I had to. Not fabulous money, but it will pay the bills and I expect that it is more than some of the self appointed uber-capitalist conservatives here on OTB make. I do realize that this is not the case for all in that industry, or even most.
I am not sure what you guys are bitching about. You hate unions, and you want the individual worker to be naked against the power of corporate employers. Conservatives have a mantra that businesses exist to make a profit, not to provide jobs.
Wal-Mart is the logical conclusion of your value system. A thriving corporation with vast revenues and profits. Fabulously wealthy owners. Part time employees who are barely scraping by. (and let’s not forget how much of Wal-Mart’s HR hit is passed along to the taxpayers)
Get used to the part time thing. During the last recession, corporations discovered they can do more with less. They will continue to do so.
@anjin-san: I am not sure what you guys are bitching about. You hate unions, and you want the individual worker to be naked against the power of corporate employers. Conservatives have a mantra that businesses exist to make a profit, not to provide jobs.
Actually, I miss those kinds of unions. Nowadays they have entirely different priorities: electing Democrats (regardless of the wishes of their members), paying their leadership exorbitant salaries and perqs, protecting the worst employees from consequences of their actions, shanghaiing people into joining unions without their knowledge and consent, and all sorts of other things. I recall one time a union was picketing a Wal-Mart in Vegas, and instead of sending out their own members, hired a bunch of temps to walk the picket line for 8 hours in Vegas summer heat. They also tend to refuse to allow their own employees to unionize, and offer crappy pay and no benefits for those low-level employees.
Give me a choice between being “naked against the power of corporate employers” or have some union Hoover their cut out of my paycheck to elect politicians I can’t stand and protect co-workers who need to be fired and line the pockets of the thugs and crooks who run most unions, I’ll go it alone. I’ll take the birthday suit over the union suit.