If you like topline numbers, you’ll like the June jobs report, issued a day early because of the Independence Day headline. The US economy added 223,000 jobs in June, a respectable if unspectacular level of job growth that outpaces population growth, and the U-3 jobless rate dropped to 5.3%. It’s when one looks past the topline numbers that the problems emerge — chief among them the fact that almost twice as many people left the workforce as found jobs:
Total nonfarm payroll employment increased by 223,000 in June, and the unemployment rate declined to 5.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, health care, retail trade, financial activities, and in transportation and warehousing.
The civilian labor force declined by 432,000 in June, following an increase of similar magnitude in May. The labor force participation rate declined by 0.3 percentage point to 62.6 percent in June. The employment-population ratio, at 59.3 percent, was essentially unchanged in June and has shown little movement thus far this year.
The new workforce participation rate is the lowest in the US since 1977. The reason that the U-3 measure dropped to 5.3% is because of the exodus from the workforce. On top of that, the BLS revised its job-growth estimates in April and May by a combined 60,000, making the entire spring look less robust than first thought — and it wasn’t that robust in the first place. The U-6 rate, considered a more complete look at unemployment, did fall to 10.5%, the lowest since July 2008.
Neither hours worked or wages budged:
The average workweek for all employees on private nonfarm payrolls was 34.5 hours in June for the fourth month in a row. The manufacturing workweek for all employees edged down by 0.1 hour to 40.7 hours, and factory overtime edged up by 0.1 hour to 3.4 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.6 hours. (See tables B-2 and B-7.)
In June, average hourly earnings for all employees on private nonfarm payrolls were unchanged at $24.95. Over the year, average hourly earnings have risen by 2.0 percent. Average hourly earnings of private-sector production and nonsupervisory employees edged up by 2 cents to $20.99 in June. (See tables B-3 and B-8.)
The Household survey looked even worse for job growth. The job growth topline comes from the Establishment survey, a poll of businesses that allows BLS to calculate payroll additions. The Household survey polls workers — and that survey showed a decline in employment of 56,000. Year on year, employment has grown by just under 2.5 million in the Household survey, but that’s just barely over 200,000 a month, a rate that only slightly outpaces population growth. The number of unemployed in the Household survey dropped 375,000, but the number not in the workforce skyrocketed by 640,000 in a month.
Bloomberg isn’t very impressed with these results:
An increase in June payrolls followed smaller gains in the prior two months and wages were little changed as U.S. job market reflected a more moderate pace of economic growth.
The addition of 223,000 jobs followed a 254,000 increase in the prior month that was less than previously estimated, a Labor Department report showed Thursday in Washington. The jobless rate fell to a seven-year low of 5.3 percent as more people left the labor force. …
The participation rate, which indicates the share of the working-age people in the labor force, decreased to 62.6 percent, the lowest since October 1977, from 62.9 percent.
CNBC calls it a miss:
American companies kicked off the summer with modest growth in hiring, sending nonfarm payrolls up 223,000 in June, according to Labor Department numbers released Thursday.
In addition to the payroll growth, the unemployment rate ticked lower to 5.3 percent from 5.5 percent, due largely to a sharp decline in labor force participation, which fell from 62.9 percent to 62.6 percent, its lowest level since October 1977. A broader measure that includes those who have stopped looking for work or working parttime for economic reasons slipped as well, from 10.8 percent to 10.5 percent.
Economists polled by Reuters had expected the number of new jobs to total 230,000 in June, with the unemployment rate at 5.4 percent.
The Associated Press calls it “solid“:
SOLID REPORT: U.S. employers added 223,000 jobs in June, and the unemployment rate fell to a seven-year low of 5.3 percent. The rate fell mostly because many people out of work gave up on job hunting and were no longer counted as unemployed.
And that’s “solid,” eh?
We can say one thing about it — it’s consistent. It reflects the consistent state of the economy during the Obama recovery, which means it’s been stagnant, lacks any sense of dynamism, and is marked mainly by shrinking work forces in relation to population and shrinking expectations. Until we get economic policies that support American dynamism and innovation, this will be what we see — people cheering the continuance of a weak status quo while Americans workers simply give up.
Update: Today’s report on manufacturing in May looks mediocre to poor:
New orders for manufactured goods in May, down nine of the last ten months, decreased $4.5 billion or 1.0 percent to $470.5 billion, the U.S. Census Bureau reported today. This followed a 0.7 percent April decrease. Shipments, down two consecutive months, decreased 0.3 billion or 0.1 percent to $482.1 billion. This followed a virtually unchanged April decrease. Unfilled orders, down five of the last six months, decreased $6.4 billion or 0.5 percent to $1,194.6 billion. This followed a 0.2 percent April decrease. The unfilled orders-to-shipments ratio was 6.98, unchanged from April. Inventories, up three of the last four months, increased $0.1 billion or virtually unchanged to $649.7 billion. This followed a 0.2 percent April increase. The inventories-to-shipments ratio was 1.35, unchanged from April.
New orders for manufactured durable goods in May, down three of the last four months, decreased $5.0 billion or 2.2 percent to $227.6 billion, down from the previously published 1.8 percent decrease. This followed a 1.7 percent April decrease. Transportation equipment, also down three of the last four months, led the decrease, $5.0 billion or 6.5 percent to $71.6 billion. New orders for manufactured nondurable goods increased $0.5 billion or 0.2 percent to $242.9 billion.
Outside of transportation, orders rose 0.1%, but excluding defense, orders fell 1.1%. Hiring may be keeping pace with the overall trends, but the outlook for economic growth in the second quarter looks limited at best.