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The ever-important Employment Situation report for June is out this morning, brought to us by the U.S. Bureau of Labor Statistics (BLS) the first Friday morning of almost every month. Compared to the shockingly high private-sector payroll report from ADP (ADP - Free Report) yesterday, today’s BLS totals tell a different story: 209K new nonfarm payroll jobs were created last month, far below the 497K we saw a day ago from ADP. The Unemployment Rate ticked down to 3.6% from 3.7%.
This is the lightest single-month BLS total since December 2020, when we saw the economy hemorrhage -268K jobs for the month. We’re clearly in a much stronger place today than we were then, even if jobs totals were well off the 218-240K expected. Adjustments for the previous two months were fairly massive, as well: -33K in May to 306K and -77K in April to 217K, which exactly matched the cycle-low 217K reported for March of this year.
Unemployment at 3.6% is still historically low, but north of the 40+-year lows we saw in April and January, at 3.4%. The high water mark of the past 12 months was 3.7% — reached three times over the past year. Labor Force Participation matched the 62.6% it has reported in the previous three monthly reports, while the Average Workweek ticked up +0.1% to 34.4 hours. The U-6 (aka “real unemployment”) jumped a bit to 6.9%, the highest print we’ve seen since August of last year.
Hourly Wages is a key metric within this report, and here we see some evidence of something more problematic, inflation-wise: +0.4% month over month and +4.4% year over year are hotter than the +0.2% and +4.2% expected, respectively. Recent highs go back to +0.5% in July 2022 on the monthly and +4.7% year over year in February of the same year. This is perhaps the most important link to “sticky” inflation, as higher wages keep labor costs lofty, causing either price hikes or shrunken margins from companies enduring these higher employment budgets.
Where we see the narrative really veer away from the ADP figures is in the breakdown of job gains by industry: whereas private-sector Leisure & Hospitality reportedly brought a whopping 230K yesterday, BLS said fewer than a tenth of those made it into June numbers: 21K. We might expect some revisions in future months on one or both of these metrics. Leading the way by sector this morning was Government hiring, +60K, followed by +41K in Healthcare, +24K in Social Assistance and +21K in Professional/Business Services (another industry that has trended much higher going back to the Great Reopening). Retail lost -11K jobs in the month, and Transportation/Warehousing was -7K.
Pre-market futures have been all over the place today, starting off mildly negative prior to the BLS release, swooping into positive territory across the board some 15 minutes later to the steepest slides of the morning so far: -100 points on the Dow, -13 on the S&P 500 and -44 points on the Nasdaq. Perhaps these jobs numbers are weak enough for the Fed to now consider pausing rate hikes a second straight month, but perhaps not — there’s still a good chance the Fed may be in the process of “over-tightening.” Then again, with wages still on the rise, the monetary policy body may feel it has no choice but to hike at the end of the month.
Image: Bigstock
June Jobs 209K Much Lower than Expected
The ever-important Employment Situation report for June is out this morning, brought to us by the U.S. Bureau of Labor Statistics (BLS) the first Friday morning of almost every month. Compared to the shockingly high private-sector payroll report from ADP (ADP - Free Report) yesterday, today’s BLS totals tell a different story: 209K new nonfarm payroll jobs were created last month, far below the 497K we saw a day ago from ADP. The Unemployment Rate ticked down to 3.6% from 3.7%.
This is the lightest single-month BLS total since December 2020, when we saw the economy hemorrhage -268K jobs for the month. We’re clearly in a much stronger place today than we were then, even if jobs totals were well off the 218-240K expected. Adjustments for the previous two months were fairly massive, as well: -33K in May to 306K and -77K in April to 217K, which exactly matched the cycle-low 217K reported for March of this year.
Unemployment at 3.6% is still historically low, but north of the 40+-year lows we saw in April and January, at 3.4%. The high water mark of the past 12 months was 3.7% — reached three times over the past year. Labor Force Participation matched the 62.6% it has reported in the previous three monthly reports, while the Average Workweek ticked up +0.1% to 34.4 hours. The U-6 (aka “real unemployment”) jumped a bit to 6.9%, the highest print we’ve seen since August of last year.
Hourly Wages is a key metric within this report, and here we see some evidence of something more problematic, inflation-wise: +0.4% month over month and +4.4% year over year are hotter than the +0.2% and +4.2% expected, respectively. Recent highs go back to +0.5% in July 2022 on the monthly and +4.7% year over year in February of the same year. This is perhaps the most important link to “sticky” inflation, as higher wages keep labor costs lofty, causing either price hikes or shrunken margins from companies enduring these higher employment budgets.
Where we see the narrative really veer away from the ADP figures is in the breakdown of job gains by industry: whereas private-sector Leisure & Hospitality reportedly brought a whopping 230K yesterday, BLS said fewer than a tenth of those made it into June numbers: 21K. We might expect some revisions in future months on one or both of these metrics. Leading the way by sector this morning was Government hiring, +60K, followed by +41K in Healthcare, +24K in Social Assistance and +21K in Professional/Business Services (another industry that has trended much higher going back to the Great Reopening). Retail lost -11K jobs in the month, and Transportation/Warehousing was -7K.
Pre-market futures have been all over the place today, starting off mildly negative prior to the BLS release, swooping into positive territory across the board some 15 minutes later to the steepest slides of the morning so far: -100 points on the Dow, -13 on the S&P 500 and -44 points on the Nasdaq. Perhaps these jobs numbers are weak enough for the Fed to now consider pausing rate hikes a second straight month, but perhaps not — there’s still a good chance the Fed may be in the process of “over-tightening.” Then again, with wages still on the rise, the monetary policy body may feel it has no choice but to hike at the end of the month.
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