U.S. Jobs: Slowing Growth, Stable Unemployment

Despite consensus high forecasts for June job growth — some as high as 500,000 — today’s number came in at a relatively modest 209,000 jobs added to the U.S. market. What we're seeing is more signs of cooling off, especially in light of reductions to the April and May numbers, down by 77,000 (to 217,000) and 33,000 (to 306,000) respectively.

‍

That all puts the three-month trailing average at 244,000 jobs per month, and shows the downward trend at the same time it maintains the posture of a relatively strong job market. Indeed in its coverage, the Washington Post quotes Joe Brusuelas, chief economist at RSM as saying the following:

‍

"As long as the economy continues to produce more than 200,000 jobs a month, this economy is not going to slip into recession."

‍

Steering Between Scylla and Charybdis

‍

Avoiding over-amped growth on the one hand, and recession on the other, gives markets a chance to cool down without the Fed necessarily forced to raise interest rates to keep applying downward pressure on prices. It’s quite a balancing act to bring down inflation while also keeping job markets healthy.

‍

So far, we’re managing to stay on the wire and avoid falling in either direction. Fingers crossed that we can keep up the balancing act moving forward!

‍

Where Growth (and Loss) Happened

‍

Digging into the numbers, government job growth led the pack, followed by health care, social assistance, and construction. Across 2023, monthly job growth has averaged 278,000, as compared to 399,000 for 2022. This also shows a cooling off, but not necessarily a stalling out (or even an impending stall). Here’s how the June numbers break down:

‍

Government added 60,000 jobs, with 27,000 of that for state governments and 32,000 more for local governments. The 2023 monthly rate here has been 63,000 jobs, more than double the monthly 2022 average of 23,000. Even so, government job totals are still below February 2022 levels, but only a little: 161,000 jobs (0.7 percent).

‍

Healthcare grew by 41,000 jobs, of which 15,000 went to hospitals, 12,000 to nursing and residential care facilities, and another 9,000 to home health care services. Dental offices lost 7,000 positions. Healthcare is nearly on par with last year: for 2023, it’s averaged 42,000 jobs monthly versus 46,000 monthly for 2022.

‍

Social assistance jobs increased by 24,000, with 18,000 of that for individual and family services positions. The 2023 monthly average stands at 22,000, slightly over the 19,000 monthly figure for 2022.

‍

Construction added 23,000 jobs, with 10,000 of that allocated to residential specialty trade contractors. For 2022, that monthly average was 22,000 jobs; in 2023 it has dipped down to 15,000 jobs (down more than 30 percent).

‍

Professional and business services rose slightly by 21,000 jobs, of which 23,000 jobs went into professional, scientific and technical services. That’s well below the year-to-date monthly average of 40,000 for 2023 (which itself is down from the 2022 monthly average of 62,000).

‍

Leisure and hospitality added the same number of jobs (+21,000) and shows flattening growth in this sector (jobs added have been about the same since May). Employment in this sector is still down from February 2022, by 369,000 jobs (2.2 percent).

‍

Retail trade employment dipped by 11,000 jobs for June, with 10,000 jobs lost in building material and garden supply stores, another 5,000 lost in furniture, home furnishings, and so forth. This was offset by a 6,000 rise in motor vehicle and parts dealers. Overall, though, retail has been flat for 2023.

‍

Transportation and warehousing lost 7,000 jobs. In this total delta, we see equal 7,000 losses for couriers and messengers, as well as warehousing and storage, offset by a 3,000 gain in air transportation.

‍

Other tracked sectors — namely, mining, manufacturing, whole trade, financial activities and other services, and our home sector of information — were more or less flat for June.

‍

Wages Keep Growing, But Sloooowly

‍

June wages were up by $0.12 per hour for all workers on private nonfarm payroll. That’s a 0.4 percent bump to $33.58 per hour. Average hourly earnings are up by 4.4 percent over the past 12-month period. And finally, wage growth (4.4 percent) has at long last gotten higher than inflation (4.0 percent, according to the U.S. Inflation Calculator).

‍

That difference is fairly modest, so one hopes that the Fed won’t use it to lean them toward rate hikes during the next meeting later this month.

‍

Where To from Here?

‍

Jobs growth is slowing but not crashing. Unemployment is still quite low, if not at historical depths explored earlier this year. Given a modestly robust job market, economists finally seem willing to say there’s no recession in the cards for 2023.

‍

Tech industry association CompTIA also sees modest but continuing job growth in technology companies and in other technology jobs across the whole jobs market. Hopefully this will work on decision makers to keep interest rates steady and growth keep humming along.

‍

Stay tuned: when next month’s report comes out, I’ll read these tea leaves yet again.