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Wall Street to Your Street
Employment Jumps in June With 222,000 New Jobs
July 11, 2017 | Mark Simenstad, Chief Investment Strategist
The U.S. economy bounced back in June, adding another 222,000 jobs, according to the U.S. Department of Labor, Bureau of Labor Statistics Employment Situation report issued July 7. This marks the 81st consecutive month of job growth (Exhibit 1).
The June figure is a sharp improvement over the lackluster 138,000 jobs added in May, and comes as somewhat of a surprise given the tightening job market. The unemployment rate was 4.4%, which was 0.1% higher than May as more people entered the workforce (Exhibit 2). It is still 0.4% below the January mark.
Initial jobless claims have remained at an extremely low level, with 248,000 claims the week ending July 1, according to the Department of Labor Unemployment Insurance Weekly Claims report (Exhibit 3). Jobless claims have remained under 300,000 for 122 consecutive weeks – the longest stretch since 1970.
In all, 1.96 million Americans are receiving unemployment benefits. That is little changed from last month and remains at the lowest level since the mid-1970s. This is even more extreme if one adjusts for growth in the labor force.
Here are some of the other key trends highlighted in the report:
- Average hourly earnings for all employees on private nonfarm payrolls rose by just $0.04 to $26.25. Year-over-year, average hourly wages have risen by $0.63, or 2.5% (Exhibit 4). Wages remain below prerecession levels.
- The number of unemployed persons looking for jobs was little changed at 7.0 million compared with 6.9 million the previous month.
- The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged over the month at 1.7 million and accounted for 24.3% of the unemployed (Exhibit 5). Year-over-year, the number of long-term unemployed was down by 322,000, but still remains at an elevated level.
- The labor force participation rate edged up 0.1 percentage point to 62.8%, as did the employment-population ratio, which was reported at 60.1% in June. Both figures are little changed over the course of this year.
- The labor force participation rate for those in their prime working years (age 25 to 54) remained at 81.5%, which is about 1.5% below the prerecession level (Exhibit 6). That continues to be a weakness in the employment recovery.
- The number of persons employed part time for economic reasons edged up from 5.2 million to 5.3 million in June, but has remained fairly steady throughout the year (Exhibit 7).
- The average workweek for all employees on private nonfarm payrolls inched up 0.1 to 34.5 hours in June (Exhibit 8).
The strong job growth in June is a good sign for the economy, although as the labor
market tightens, it will become increasingly difficult to maintain that pace as companies
compete for qualified employees. We would still like to see an improvement in wage
growth and in the workforce participation rate – particularly for those in their
prime working years.
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All information and representations herein are as of June 30, 2017, unless otherwise noted.
The views expressed are as of the date given, may change as market or other conditions change, and may differ from views expressed by other Thrivent Asset Management associates. Actual investment decisions made by Thrivent Asset Management will not necessarily reflect the views expressed. This information should not be considered investment advice or a recommendation of any particular security, strategy or product.
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