The economy shook off its complacency and for once in a rare while, ADP was accurate in its prediction – 288,000 jobs were added in June, above expectations.
Workforce participation, however, is at a 36-year low – comparable to the years of the Carter malaise – while the number of involuntary part-time workers rose by 275,000.
Job gains were widespread, led by employment growth in professional and business services, and also in lower-wage jobs like retail trade, food services and drinking places. Health care also saw gains, the Bureau of Labor Statistics reported Thursday.
"Today’s jobs report was positive overall, showing that the pace of hiring continues a solid upward trajectory. The string of five consecutive monthly gains averaging more than 200,000 was the best performance since late 1999," said Fannie Mae chief economist Doug Duncan. "However, not all is rosy, especially from the Federal Reserve’s perspective. The labor force participation rate remains at depressed levels last witnessed during the 1970s. In addition, despite the improved pace of hiring, wage gains remain weak, implying the persistence of considerable slack in the labor market.
"The question of whether labor market data indicate significant slack or not is a source of debate among Federal Reserve Board members and others. The decline in the unemployment rate combined with a recent uptick in the inflation rate has raised market speculation that the Fed will start increasing the Fed Funds Target rate sooner than prior consensus expectation," Duncan said. "This presents a downside risk to housing activity that has just begun to regain its footing after the rate rise mid-last year."
Concerning for the housing industry, employment changed little over the month in construction, reflecting the flat-line trend in construction spending.
The “U-6,” which is the total unemployed, plus all marginally attached workers plus total employed part time for economic reasons, as a percent of all civilian labor force plus all marginally attached workers, remains doggedly high.
That’s the rate for the unemployed, the underemployed and the discouraged, and it stands at 12.1%.
The official unemployment rate, which doesn’t take into account those unemployed long-term or the underemployed, declined by 0.2 percentage point to 6.1%.
This marks five months with job gains above 200,000, which is the threshold for replacement for population growth.
Finally, the weekly hours worked for all employees was 34.5%, same as expected and the same as last month.
Blacks and teenagers are still in double digits in unemployment, 10.7% and 21% respectively, while men are at 5.7%, Hispanics at 7.8%, and whites at 5.3%. Asians stood at 5.1%.
In June, the civilian labor force participation rate was 62.8% for the third consecutive month, a historic low, while the employment-population ratio, at 59%, remained unchanged and still troubling.
Employers are still relying on temporary and part-time jobs to fill gaps rather than full-time hiring. Employment continued to trend up in temporary help services.
Here’s a good summary.
Bottom line: This labor market is much much weaker than the last time the unemployment rate stood at 6.1 percent.— Binyamin Appelbaum (@BCAppelbaum) July 3, 2014