Total nonfarm payroll employment increased by 372,000 in June, slightly less than the 390,000 jobs added in May, according to the latest jobs report from the U.S. Bureau of Labor Statistics (BLS). The unemployment remained unchanged for the third consecutive month at 3.6%.
“June’s jobs figures came in above expectations but down slightly from last month,” says Nikolas Scoolis, manager, housing economics for Zonda. “The most recent data shows that the private sector has now fully recovered from the pandemic-induced losses.”
The number of unemployed persons remained essentially unchanged at 5.9 million in June. The unemployment rate and number of unemployed individuals are little different from their values in February 2020 (3.5% and 5.7 million, respectively).
“[The] jobs report from the Bureau of Labor Statistics showed robust job gains in June totaling 372,000; though, as expected, this was a slight deceleration from the prior month’s pace,” says Doug Duncan, chief economist at Fannie Mae. “Job gains were broad-based across sectors, with the largest gains concentrated in education and health services (+96,000), professional and business services (+74,000), and leisure and hospitality (+67,000) sectors. Notably, the retail trade sector saw job growth of 15,400 this month, showing that last month’s steep decline may have been a one-off.”
The labor force participation rate and the employment-population ratio were both little changed month over month, at 62.2% and 59.9%, respectively. Both measures remain approximately 1.2 percentage points below pre-COVID February 2020 levels.
“The number of employed households actually fell by 315,000 in June, but we note that the household survey’s smaller sample size relative to the establishment survey makes this figure somewhat more volatile,” says Duncan. “On the other hand, labor force participation ticked down one-tenth to 62.2% in June; this figure has been notably volatile in recent months and still remains below the pre-pandemic peak, as many workers are still hesitant to return from the sidelines.”
Among the unemployed, the number of permanent job losers and the number of persons on temporary layoff, 1.3 million and 827,000, respectively, changed little from May to June. The number of long-term unemployed—those jobless for 27 weeks or more—was also essentially unchanged from May at 1.3 million. The long-term unemployed accounted for 22.6% of all unemployed persons in June.
“Wages grew at 5.1% year over year in June, down slightly from the prior month, though still a clear indication that firms are looking to hire, and likely exacerbating inflationary pressures in the economy,” says Duncan.
The number of individuals not in the labor force who currently want a job remained unchanged at 5.7 million in June. Discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, numbered 364,000 in June, down from 415,000 in May.
According to the Household Survey Supplemental Data, the share of employed persons who teleworked because of the coronavirus pandemic was 7.1%, down from 7.4% in May. In June, 2.1 million individuals reported they had been unable to work because their employer closed or lost business due to the pandemic, an increase from 1.8 million in May. According to the BLS, 610,000 persons were prevented from looking for work due to the pandemic, an increase from 455,000 in May.
“On a sector level, manufacturing has ticked up above the pre-pandemic level, but others like leisure and hospitality lag behind,” Scoolis says. “July’s release will give better insight into a potential slowdown, as the collection period for June landed on the first half of the month.”
Duncan says residential construction employment, including specialty trade contractors, decreased by 4,100 in June following “strong gains” in recent months. The development likely makes it “more difficult for builders to fulfill their current orders,” Duncan says.
“We believe this report, in particular the robust payroll and wage gains, should reaffirm the Federal Reserve's commitment to aggressive policy tightening in the coming months,” he says.
