The US economy added 206,000 jobs in June, surpassing the Dow Jones forecast of 200,000, although this figure is a slight decrease from the downwardly revised gain of 218,000 in May. The unemployment rate unexpectedly climbed to 4.1%, tying it for the highest level since October 2021. Average hourly earnings increased by 0.3% for the month and 3.9% year-over-year, both figures aligning with economic estimates.
Nonfarm payroll numbers for May were significantly revised downward from an initial estimate of 272,000 to 218,000.
NEW JOBS REPORT IS OUT >> "America’s employers delivered another healthy month of hiring in June, adding 206,000 jobs […] reflecting the resilience of America’s consumer-driven economy…"https://t.co/xgmibN7Wdf
— Secretary Jennifer Granholm (@SecGranholm) July 5, 2024
The unemployment rate increased even as the labor force participation rate rose to 62.6%, up by 0.1 percentage point. The prime age labor force participation rate, focusing on individuals aged 25 to 54, peaked at 83.7%, its highest level in over two decades.
A broader unemployment rate, which includes discouraged workers and those working part-time for economic reasons, remained stable at 7.4%.
Another strong jobs report. The Biden-Harris administration has been leading the economy with a steady hand. https://t.co/wDZ6IlYzAi
— Randi Weingarten 🇺🇦🇺🇸💪🏿👩🎓🟣 (@rweingarten) July 5, 2024
Household employment rose by 116,000, although it showed a decrease of 28,000 full-time workers and an increase of 50,000 part-time workers. Government job creation played a significant role in the June figures, with a surge of 70,000 jobs.
Other sectors also contributed, with health care adding 49,000 jobs, social assistance up by 34,000, and construction increasing by 27,000. Conversely, professional and business services declined by 17,000 jobs, and retail saw a reduction of 9,000 jobs.
June job growth exceeds expectations
Following the report, market reactions were mixed, with wages holding steady and minor fluctuations in Treasury yields. David Russell, global head of market strategy at TradeStation, commented, “The job market is bending without yet breaking, which boosts the argument for rate cuts.”
In addition to the May revision, the Bureau of Labor Statistics also revised April’s job gains down to 108,000, cutting 57,000 from the previous estimate. These revisions resulted in a net reduction of 111,000 jobs over both months.
Long-term unemployment sharply rose this month, increasing by 166,000 to 1.5 million, compared to 1.1 million the previous year. The percentage of long-term unemployed as a share of the total jobless rose to 22.2% from 18.8% a year ago. Unemployment rates for different demographics showed disparity.
The rate for Black workers increased to 6.3%, its highest since March, and the rate for Asians jumped a full percentage point to 4.1%, the highest since August 2021. Federal Reserve officials continue to evaluate data on inflation and the labor market to determine their next move. Despite market expectations for two rate cuts by the end of 2024, Fed policymakers indicated at their June meeting that they foresee just one cut, contingent upon additional favorable economic data.
“There are no cracks here that would cause the Fed to rush to the rescue with rate cuts, and the labor market is in line with a continuation of slowing inflation,” said Robert Frick, corporate economist at Navy Federal Credit Union. Currently, the Fed’s key lending rate remains in the range of 5.25%-5.50%, the highest in 23 years. Although recent indicators signal some softening in the labor market, broader economic growth remains moderate, with GDP increasing at an annualized rate of 1.4% in the first quarter and on track to grow at 1.5% in the second quarter, according to the Atlanta Fed.
