U.S. Job Growth Holds
Steady in June
The U.S. Labor
Market Report covering the national employment situation in June showed
continued growth with a gain of 223,000 jobs. The unemployment rate dropped to
5.3%, the result of both job creation and a decline in workforce participation.
The average hourly wage remained unchanged over the month at $24.95. Over the
year, average hourly earnings were up by 2.2%, ahead of inflation but not
enough to encourage much in the way of additional spending by the average
American household.
The
employer payroll survey reported that total nonfarm employment in the United
States increased by 223,000 jobs in June. Accompanying last month’s job gain
were revisions to the April figure (revised down from 221,000 jobs to 187,000)
and the May number which was also revised down, from 280,000 to 254,000. With
these revisions, the gains in April and May combined were 60,000 lower than
previously reported. Over the past three months, job gains have averaged
221,000 per month. For all of 2014, job growth averaged 260,000 per month.
On
a year-to-year (YTY) basis, U.S. employment expanded by 2.94 million jobs, an
increase of 2.1%. Yearly gains have now been above two percent every month
since September of last year. Every major industry sector added jobs over the
year with the exception of mining and logging. The fastest growing sectors in
YTY percentage terms were construction (4.2% or 259,000 jobs): professional and
business services (3.5% or 672,000 jobs); leisure and hospitality (2.9% or
425,000 jobs); and education and health care (2.7% or 571,000 jobs).
New
record high levels of employment were reached last month in the following super-sectors:
trade, transportation, and utilities; professional and business services;
education and health; leisure and hospitality; and other services (these are
mainly jobs in repair and maintenance, personal and laundry services and
membership organizations).
The
unemployment rate fell to 5.3% from 5.5% in May and 6.1% a year ago. Much of
the decline over the month was due to a drop in the labor force participation
rate, which slipped to 62.6% in June compared with 62.9% in May. After reaching
and maintaining a plateau of 67.1% from 1997 to 2000, the rate of labor force
participation has been on a trend decline, due in part to demographic factors
like retiring baby boomers. Of the 93.6 million Americans currently not in the
labor force, 6.1 million would like to have a job.
Other
labor market indicators in the June report continued to show improvement as
well. The more comprehensive U-6 unemployment rate, which counts part-time
workers who would prefer full-time work and individuals who would like a job but
have given up looking for work was 10.5%, down from 10.8% in May and 12.0% in
June last year. The U-6 rate was at its lowest in nearly seven years, last hitting
10.5% in July 2008.
Overall,
unemployed individuals are finding work faster. The median duration of unemployment
in June fell to 11.3 weeks from 13.2 weeks a year ago. Improvements in the
labor market have also helped bring down the share of workers who have been
jobless for 27 weeks or more. In June, that share was 25.8% versus 32.6% in
June 2014 and is now very close to returning to the long-term average of 25.0%.
Over the past 12 months, the number of long-term unemployed persons has fallen
by 955,000 an indication that the spike in long-term unemployment (exceeding
45% during the recession) was cyclical as opposed to structural in nature.
Summary: The unemployment
rate dropped to 5.3%, the lowest rate in over six years. Although this was due
in part to a transitory decline in the labor force (there has been a decline in
the labor force between May and June for the past three years in a row), there
were many more positives than negatives in this month’s report and the job
outlook remains one of steady improvement.
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