Signs of Cooling Continue as Labor Market Adds 209,000 Jobs

The US Labor Market added 209,000 jobs last month according to the Employment Situation Summary released this morning by the Bureau of Labor Statistics. Unemployment remained mostly the same at 3.6%.  Stocks plummeted after Thursday’s ADP Employment Report showed private payrolls added 497,000 jobs last month, nearly double what it reported in May.  ADP Chief Economist, Nela Richardson, said “Consumer-facing service industries had strong June, aligning to push job creation higher than expected. But wage growth continues to ebb in these same industries, and hiring likely is cresting after a late-cycle surge.”

Economists predicted Thursday that the Federal Reserve would be pushing interest rates even higher, tightening an already tight market, but numbers from the BLS paint a much different picture.  The labor market is showing more signs of cooling, although interest rates are still expected to increase when the Fed sets rates again on July 26th.

The Consumer Confidence Index, updated on June 27th, increased to 109.7 in June, a significant uptick from the 102.5 reported in May.  The survey also includes the Expectations Index, an indicator for a recession, which increased almost 8 points from 71.5 to 79.3 in June. According to this index, anything below 80 points forecasts a coming recession.  “Consumer confidence improved in June to its highest level since January 2022, reflecting improved current conditions and a pop in expectations,” said Dana Peterson, Chief Economist at The Conference Board.

According to today’s report, labor force participation remained at 62.6% for the fourth month in a row, and the number of part time employees due to economic reasons increased by 452,000 in June. This reflects individuals who would have preferred full-time work, but had their hours cut or couldn’t find full-time work.

Government employment led job gains in June with 60,000 added jobs.  State government rose by 27,000 job, local government increased 32,000, and the sector as a whole added an average of 63,000 each month thus far in 2023.  Health care added 41,000 jobs, with the most gains in hospitals, which increased 15,000 and nursing and residential care facilities added 12,000.  Social assistance added 24,000 jobs.  Construction added 23,000 jobs, professional and business services added 21,000, and retail trade added only 11,000. The average hourly earnings for nonfarm payrolls increased by 12 cents and the average workweek remained increased .1 hour for all employees to 34.4 hours.


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