For June, A Jobs Report That Basically Reads As ‘Meh’

The June Jobs Report was okay, but it certainly doesn't inspire much confidence.

unemployment

The June Jobs Report, released a day early today due to the impending 4th of July Holiday Weekend, follows the pattern of many recent reports in that it is good news, but hardly anything spectacular:

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 unemployment rate declined by 0.2 percentage point to 5.3 percent in June, and the number of unemployed persons declined by 375,000 to 8.3 million. (See table A-1.)

Among the major worker groups, the unemployment rates for adult men (4.8 percent), adult women (4.8 percent), and blacks (9.5 percent) edged down in June, while the rates for teenagers (18.1 percent), whites (4.6 percent), Asians (3.8 percent), and Hispanics (6.6 percent) showed little change. (See tables A-1, A-2, and A-3.)

The number of long-term unemployed (those jobless for 27 weeks or more) declined by 381,000 to 2.1 million in June. These individuals accounted for 25.8 percent of the unemployed. Over the past 12 months, the number of long-term unemployed has declined by 955,000. (See table A-12.)

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 number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers), at 6.5 million, changed little in June. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time

(…)

Total nonfarm payroll employment rose by 223,000 in June, compared with an average monthly gain of 250,000 over the prior 12 months. In June, job gains occurred in professional and business services, health care, retail trade, financial activities, and in transportation and warehousing.

(…)

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 change in total nonfarm payroll employment for April was revised from +221,000 to +187,000, and the change for May was revised from +280,000 to +254,000. With
these revisions, employment gains in April and May combined were 60,000 lower than previously reported. Over the past 3 months, job gains have averaged 221,000 per month.

This isn’t bad news, of course, but as The New York Times puts it’s not exactly great news either:

Good, but hardly great.

The economy added a healthy 223,000 jobs last month, the Labor Department reported Thursday, but other indicators, showing wages growing slowly and jobless Americans remaining on the sidelines, painted a grayer picture.

Indeed, while the unemployment rate fell to 5.3 percent, the lowest in seven years, that was driven largely by an exodus of people from the work force, rather than more Americans finding work. Moreover, the strong job gains for April and May, which had led many analysts to predict that the economy was picking up steam, were revised downward by 60,000 jobs.

Despite the drop in the unemployment rate, from 5.5 percent in May, average hourly earnings stayed flat, disappointing hopes that wages were finally increasing for many workers and suggesting that the labor market still has plenty of slack.

The share of American adults either working or looking for a job, which in many ways is a better gauge of economic robustness than the oft-cited jobless rate, fell 0.3 percentage point in June. With June’s drop, the labor participation rate is now at its lowest level since 1977.

“This was an okay report, but the unemployment rate didn’t go down for the right reasons,” said Liz Ann Sonders, chief investment strategist at Charles Schwab,

Still, after bottoming out in March as the overall economy stalled, hiring has been reasonably strong if not spectacular inrecent months, along with other indicators like home sales and consumer spending. In the first half of the year, employers added workers at an average rate of 208,000 a month, compared with a monthly gain of nearly 260,000 jobs in 2014.

While the American economy is not delivering as many gains to workers as expected six years into the recovery conditions here stands in sharp contrast to the situation overseas. Europe has been rocked by the continuing drama over whether Greece will exit the eurozone, and concerns are rising about the fallout from the slowdown in China’s once white-hot economy.

Policy makers at the Federal Reserve are keeping a close eye on conditions abroad and volatility on Wall Street and overseas bourses, which could shift the timetable for the central bank’s long-awaited increase in short-term interest rates if markets show signs of panic.

So far, anything resembling the contagion of 2008 has not materialized, despite Greece’s slow-motion descent into financial chaos. Although the jobs data for June suggest a September rate increase by the Fed is still possible, experts caution that it is far from a lock given the uncertainty overseas.

Obviously, an increase of more than 220,000 jobs is nothing to dismiss easily, although I’d suggest waiting until the revisions that will come out over the next several months to determine just how good that number really is in the end. Of more concern is the underlying data. Once again, we see the number of people participating in the labor force drop to where it is now at a point where it hasn’t been since 1977. As I’ve said before, at least some of this can be attributed to the retirement of the Baby Boom Generation, but that doesn’t account for all of it. When the unemployment rate goes down not because more people are employed, but because fewer people are even bothering to look for work, that’s hardly good news. Additionally, the average work week remains stagnant, as do average hourly earnings. So, while cheering the good news of the topline numbers, which will be all the media concentrates on today, it’s worth keeping in mind that the data inside the report isn’t quite as cheerful.

As James Pethokoukis suggests in his first look at today’s report, the one takeaway from these numbers is that there seems to be little reason for the Federal Reserve to begin raising interest rates. Granted, those rates have been set at historically low levels for years now and, after inflation is factored in, the rates for some of the short-term debt issued by the United States is effectively below zero. However, there have been no signs whatsoever of any inflationary impact from those low rates. Economic growth has not entered territory that you’d expect it see if there was inflationary pressure on the economy. Price levels as measured by CPI and PPI are not moving at an unusual rate. We also haven’t seen much evidence of an inflationary impact on Wall Street, in the real estate market, or in other areas. The Fed ended its Quantitative Easing program months ago, which was probably long overdue given the fact that there was no real evidence that the policy was accomplishing anything other than boosting stock prices, and it has been signaling for some time that an interest rate hike may be just around the corner. Given economic statistics like this, which clearly seem to show that the economy is moving slowly at best, I’m not so sure that even a modest increase would be appropriate at this time. Add into this the fact that we don’t know at this point what the impact of the situation in Europe will be here in the United States, and the seeming eagerness of Janet Yellin and her fellow Board members to start turning the ship on interest rates for some reason doesn’t make much sense at all.

FILED UNDER: Economics and Business, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. al-Ameda says:

    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.

    “Meh”? Well, the ‘meh’ never ends when it comes to assessing economic performance since the 2008 crash.

    Following the greatest financial collapse since the Great Depression, we’ve had nearly 60 months of steady growth in employment and reduction in the UE rate (from 10% down to 5.3%) and all we can muster is “meh”?

    Compare our post-crash economic performance with that of our European friends and you realize that by taking the path of non-austerity and QE we avoided a much deeper recession and have clearly been on a path of steady economic recovery and growth in GDP – while many of our European friends have not experienced similar growth.

  2. Gustopher says:

    When the unemployment rate goes down not because more people are employed, but because fewer people are even bothering to look for work, that’s hardly good news.

    With an unemployment rate of 5.3%, I think it is possible that people are leaving the workforce for reasons other than that they can’t find a job and give up looking.

  3. michael reynolds says:

    I love that our basis for comparison is effectively to times when we were creating vast bubbles in tech and real estate. Why, this isn’t nearly as good as when we were building millions of homes no one could really afford. People with wildly inflated home values thought they were rich and spent like drunken sailors and the result was jobs, jobs, jobs. Until it crashed, crashed, crashed.

    Ah, yes, those were the good old days. Definitely not “meh.”

    We off-shore the jobs that won’t pay an American wage. Those jobs that can’t be sent to Bangladesh are given to apps and robots. The Republican party has systematically destroyed the one tool the working man had to try and capture some tiny slice of massive corporate profits – the unions. It’s a bloody miracle we have any job growth at all, and we won’t see wages rise until we undo the malicious damage Mr. Reagan and his followers wreaked on the American middle class.

  4. michael reynolds says:

    @Gustopher:

    I agree. This canard has gone unchallenged long enough. In my area (Marin County) unemployment is at 3%, there are Help Wanted signs all over the place – clerks, waiters, baristas, drivers. In-N-Out is pleading for people to take $12 an hour. If discouraged workers anywhere in the Bay Area want a job they can have a job. We are unusual in the Bay Area but not unique. Nebraska 2.5% UE. Hawaii 4.1%. Minnesota 3.7%. Texas 4.2%.

    There are jobs out there. They’re just lousy jobs with lousy pay and lousy benefits. Why are the available jobs so bad? Off-shoring, automation, and the absence of unions. And why is there no one to stand effectively against off-shoring and automation? Because that’s the job the unions would have done. Subtract unions and you have no one standing for average American workers.

    We have an economy run by the rich, for the rich, a profoundly corrupt political system reduced to Nigerian levels of corruption by the Supreme Court.

  5. C. Clavin says:

    For years now…employment in the Public Sector is the same…

    showed little or no change over the month.

    We are cutting jobs in the Public Sector on net…month after month after month after month after month. While Republican Presidents were busy growing Government…we are now effectively reducing it. And yet you are shocked at the employment situation. You are getting the economy you asked for. Stop whining.

  6. Avid sportman says:

    @michael reynolds:

    I love that our basis for comparison is effectively to times when we were creating vast bubbles in tech and real estate.

    We’re in a stock bubble now, the median stock valuation in the S & P 500 has never been higher including the 2000 and 2007 market peaks. On the most reliabe valuation metrics the 10 year annual returns for stocks is negative (slightly positive including dividends) A crash is already baked into the cake, the only question now is when it’s going to happen and how bad it’s going to be.

    I also don’t pay much attention to employment numbers; they’re a lagging indicator. Most of the warning signals for a downturn have been flashing for the last year or so.

  7. stonetools says:

    Doug is right that Fed shouldn’t raise rates at this time. The economy is still weak in some sectors, and there is no evidence at all that inflation is rising-which would be only reason to raise rates.Mind you, conservatives have screaming for years now that hyperinflation is inevitable, thanks to loose federal monetary policy. Glad Doug has stopped listening to those idiots. Meanwhile, looks like Obama has successfully steered the economy out of the abyss it had blundered into because of GWB’s mismanagement and adherence to conservative economic theory (Remember the “efficient market hypothesis?”. Nobody does, except to mock it.)

    Doug’s talk of an unemployment rate of 5.3 per cent as “meh” is ironic, in the light of history. At this point in the Great Depression , unemployment rates were in the teens. And in 1987,the seventh year of the reign of Saint Ronaldus,who presided over the greatest economic recovery in the history of mankind?The unemployment rate was …6.2 per cent. ( Would Doug have called that “meh”? Hah, I amuse myself).

  8. Avid sportman says:

    @michael reynolds:

    Off-shoring, automation, and the absence of unions.

    Off shoring isn’t as much an issue as it was in the past, even China is losing manufacturing jobs; it’s all being automated and there’s not much you can do about it. Automation is coming and in the short term entire industries are going to automate: taxis and truck drivers, waiters, fast food, bartenders. The higher wages go and lower interest rates are only going to speed up the process. But increases in productivity will spur job growth they always have; the automobile industry created tons of jobs, the internet has created countless jobs, something will drive job growth if we let it. The key is to not waste capital propping up jobs that will disappear no matter what we do.

  9. C. Clavin says:

    @Avid sportman:
    Yes…the sky is falling…put all your money in gold. Right now.
    Stocks are likely over-valued and ready for a correction…but there is enough fear and caution out there to keep this from being a typical bubble. Bubbles are characterized by unreasonable expectations and exuberance. The Dow has been essentially flat for the last 6 months. The biggest question out there right now is Yellen and the Fed.

  10. David M says:

    Clearly we need to cut unemployment benefits, food stamps, public employment, then eliminate Medicaid, repeal Obamacare and finally privatize Social Security and Medicare.

    That’s the obvious Republican solution for 5.3% unemployment.

  11. Avid sportman says:

    @C. Clavin: Fair market value on the S & P 500 using historically reliable valuation metrics is around 930 (note this is not a prediction), you can call that a correction if you want but if stocks were to fall to fair market value that represents a decline of roughly 55% from here. Valuations always end up mattering, when is just a patter of time. 50% draw-downs happen fairly frequently, I’m not suggesting this one will be the end of the world all I’m saying is that if one was to say that 2000 and 2007 were bubbles then current stock valuations also represent a bubble.

  12. C. Clavin says:

    @Avid sportman:
    Like I said…buy gold and stock pile canned goods. you’ll probably want to stock up on ammo, too.

  13. Avid sportman says:

    @Avid sportman: Also stock market crashed don’t automatically coincide with recessions, see 1987.

  14. michael reynolds says:

    @Avid sportman:

    You get halfway there.

    Yes, automation joins off-shoring as a serious, long-term, ain’t-going-away problem. Yes, it will lead over the long term to higher unemployment, eventually much higher unemployment.

    But tossing off a quick, so let’s not waste capital, is not a solution. Even the unemployed are allowed to vote and I don’t think benign neglect and capital retention is going to be an approach they’ll support.

    The future is more socialist. That’s just reality. Higher taxes, a more developed safety net, a much more egalitarian society, coming whether we like it or not.

  15. Avid sportman says:

    @michael reynolds: I disagree, over the intermediate term, automation is going to cost jobs, long term it will help create jobs, technology always does. At some point there will be a driver for jobs, I don’t know what it will be or when it will happen, but it will happen. Could anyone imagine the internet in the 70’s? How about the car in 1880, or the locomotive in 1780? All of these created tremendous economic long-term growth. Which brings me to my second point, I wasn’t trying to imply that we should remove the social safety net. or neglect anyone in an attempt to conserve capital. What we shouldn’t do is waste resources trying to prop up jobs in an attempt to delay the inevitable. A better use of that money would be to support and provide training and resources to those that are losing their jobs to automation so that they are prepared to be hired for the jobs that will be created. This can and should be accomplished whether the future is more socialist or conservative.

  16. michael reynolds says:

    @Avid sportman:

    long term it will help create jobs, technology always does.

    That’s a statement of faith, not fact, and I don’t do faith. The first civilian use computers didn’t really come on the scene until the 1970s and 45 years is not enough of a base to reach any conclusion on the future. The internet didn’t become a major force until what, 20 years ago? The iPhone first appeared just 8 years ago. The very idea of an “app” is not yet a decade old.

    In fact, it’s obvious nonsense to simply assume that automation will create rather than destroy jobs. The very purpose of an automated device is to replace a human being. You’re whistling past the graveyard and relying on faith-based assumptions while folks in labs are busy pushing toward artificial intelligence.

  17. Gustopher says:

    @michael reynolds: I don’t think we are recording the data to have any idea why the workforce is decreasing.

    It seems to violate common sense to believe that in an economy with such low unemployment, people are giving up looking, but it might be that there are no middle class jobs and people are giving up rather than going for lower paying work. This would be bad.

    Or, it might be that ObamaCare means fewer people have to work to get access to health insurance, and some of these people are checking out. This would be good.

    Or it could be any number of other explanations, of varying degrees of goodness/badness.

  18. Avid sportman says:

    @michael reynolds:

    That’s a statement of faith, not fact, and I don’t do faith.

    Sure it is, but all predictions on the future have a measure of “faith” to them. I’m unaware of any means of making predictions with absolute certainty. All I did was assign a vague probability that technology will create jobs long term based on the fact that has historically been true. It’s no different than my previous post indicating that I thought stocks were horribly overvalued based on historical valuation metrics, it’s just easier to use numbers in that prediction. I may be right I may be wrong (it certainly wouldn’t be the first time and it won’t be the last), but your assertion that automation will destroy jobs is equally founded in the “faith” that “this time is different”. I also don’t postulate that it’s going to a smooth ride, to 0% unemployment bliss. Quite the contrary, over the next 50-100 years we’re bound to have recessions, depressions, wars, famine, etc, and job growth is not going to be applied equally. However, I stand by my prediction that automation will ultimately create jobs rather than destroy them on the basis that technology has created economic growth and job growth long-term and that this time is no different

  19. grumpy realist says:

    @Avid sportman: We may not re-create the jobs destroyed by automation.

    That’s essentially what industrialization has been–getting rid of inefficiencies in the manufacturing process and turning it over to machines. The problem has been–we’ve never thought what should happen to the people thrown out of work.

    And we’re probably not going to. In a different society, we might be more willing to pay for interaction with a human, as opposed to a robot. You can either order a hamburger by self-order or pay a bit more and get your order handled by a human.

    I think I know what we would all go for. Because cash is king.

    And anything considered “unskilled” we don’t want to pay for, no matter what. Including all the “caring roles.” Look at what lousy pay we provide for people who take care of other people. Neither do we pay much for teachers taking care of our kids. But we’re willing to throw away millions of dollars paying hedge-fund lunatics.

    Something is wrong here…

  20. grumpy realist says:

    (P.S. If anyone has been following my ranting about the situation in Greece–the main reason I’ve been so hard on the Greek government is because I agree with them a lot–and think they have totally and completely screwed up the situation. They’ve made it IMPOSSIBLE for the Europeans to look at the balance of power between labor and capital…..)

  21. michael reynolds says:

    @Avid sportman:

    Except that it’s already different this time. High persistent unemployment in virtually every developed nation. Profits? Up. Stock market? Up. GDP? Up. Jobs that pay a living wage? Flat.

    I’ve had enough of governing on faith. Republican economics – handing every conceivable advantage to capital while castrating labor – has been an absolute disaster for this country. Capital spends its time inflating bubbles, cashing out the profits, and laying waste to working people when they crash the economy.

    We need to dispense with trickle down bullsh!t and union-busting bullsh!t and free trade bullsh!t and de-regulation bullsh!t and self-policing bullsh!t and all the other articles of bullsh!t Republican economic faith. Capital doesn’t know how to manage an economy, capital only knows how to line its own pockets by any means necessary, legal or illegal, moral or immoral, heedless of the destabilizing effects. It’s like hiring a tapeworm to give you nutritional advice.

    It’s not “faith” to project that when billions are spent pursuing technology whose essential purpose is to replace a human worker, that we are eventually going to have a paradigm shift away from human work. If a guy says he’s building a bomb and spending billions doing it, don’t you think maybe that’s reason to expect an explosion?

  22. michael reynolds says:

    @Gustopher:

    I agree. There is some kind of a hole in the data. Explanations are lacking.

    I’ve suggested that a part of the problem is that we’ve reached peak consumerism. There is simply less appetite for mindless consumption, in part because there’s nothing terribly exciting that needs buying.

    And before someone tells me about the working class still needing X and Y and Z, yes, of course, but that’s not the whole of demand. This economy doesn’t run on selling people what they need. Jesus, most of us would be just fine on half of what we currently consume, and we’d undoubtedly be healthier.

    You want a bike. OK. You need a bike. OK. Do you need a special outfit to wear while riding your bike? No. No, you don’t. But there’s a great deal of money to be made by convincing you that you do. Does your pet need prime cuts of Alaskan salmon? No. Do you really need an annual check-up? No. Do you need a special gift-wrapping room in your house? No.

    The economy is not about what we need, it’s about what we want. It’s been that way for a long time, but a trend lasting 50 years is not enough to create an assumption that such desires will continue unabated forever. Consumerism is dying in the rising generation. They don’t want a $300 pair of sneakers, they want 300 followers on Twitter because status is more about the latter than the former.

    The ethos has changed. Consumerism wasn’t some natural law, it was a phase. As materialistic as Americans are, even we figure out eventually that the 48 inch TV is plenty big and we don’t really want a 60 inch.

  23. Avid sportman says:

    @grumpy realist: We’ll recreate the jobs we lose to automation, it just doesn’t seem that way now because we’re at inflection point. The speed and scope of technological advancements are proceeding faster than anyone could have imagined and guarantees that the transition is going to be difficult (a vast understatement)

  24. Avid sportman says:

    @michael reynolds:

    It’s not “faith” to project that when billions are spent pursuing technology whose essential purpose is to replace a human worker, that we are eventually going to have a paradigm shift away from human work.

    I agree and have said as much, I expect structurally high unemployment to last for quite some time in no small part due to automation. It could be 10, 15, 20 years, heck it could even be longer I have no idea, but 50-75 years from now there will be jobs in sectors of the global economy that no one could ever dream of. Could you imagine living in the 30s and envisioning that one day we would have computers and that global commerce would be run with them? No and that’s exactly my point. To use your analogy, we both expect the billion dollar bomb to go off and it’s not going to be pretty, there will be recessions, maybe a depression or two who knows and it will be paradigm shifting and there will be winners and losers there’s no doubt about that. But where we differ is that from the rubble I expect there to be a driver for global jobs at some point I don’t know what or where it will come from.

    I’ve had enough of governing on faith. Republican economics – handing every conceivable advantage to capital while castrating labor – has been an absolute disaster for this country. Capital spends its time inflating bubbles, cashing out the profits, and laying waste to working people when they crash the economy.

    We need to dispense with trickle down bullsh!t and union-busting bullsh!t and free trade bullsh!t and de-regulation bullsh!t and self-policing bullsh!t and all the other articles of bullsh!t Republican economic faith. Capital doesn’t know how to manage an economy, capital only knows how to line its own pockets by any means necessary, legal or illegal, moral or immoral, heedless of the destabilizing effects. It’s like hiring a tapeworm to give you nutritional advice.

    I have no idea what this has to do with automation or the discussion at hand. If you want to turn this into an anti-capitalism rant I have no desire to debate that. I simply suggested that rather than try and keep candle makers afloat after the lightbulb is invented we use that same monetary, social, and intellectual capital to provide assistance and resources to them for the next global driver of jobs. Automation is a paradigm shift that is going to happen no matter what the economic policy. The speed and scope of the changes is just to great to make it a smooth transition. This isn’t the first time sectors have been put out of business (pony express, Canals, telegraphs) but it hasn’t happened on this large a scale before. That’s where the opportunities for the future will be and someone will take advantage and the next economic boom will be the result. If you don’t think it’ll ever happen then I suppose we’ll have to agree to disagree.

  25. michael reynolds says:

    @Avid sportman:

    I have the terrible feeling that we may be largely in violent agreement.

  26. JohnMcC says:

    @grumpy realist: I’ve been following with the same general sort of ‘oh damn!’ attitude. If you haven’t seen it today’s K-thug op-ed takes a quick scan of the economies of Europe and points out that the Greeks are hardly alone in dealing with Great Depression level unemployment and failures to invest. Headline is telling – ‘Europe’s Many Disasters’.

    Even further off-topic: Thanx for the tip that Red Roof Inn allows dogs.

  27. Tyrell says:

    @Gustopher: Yes, in the economic “recovery” many have returned to work in such lucrative fields as shoe salesmen, sidewalk cleaners, school crossing guards, and door to door vacuum cleaner sales.

  28. rachel says:

    @grumpy realist:

    Look at what lousy pay we provide for people who take care of other people. Neither do we pay much for teachers taking care of our kids.

    Yes, and the teachers get better pay than what mothers do for that job.