June’s Jobs report, from the US Labor Dept, showed a surprise jump in non farm jobs and gave economists a smile over their morning coffee this Friday since they had expected only 278,000; so, the news of 372,000 was an even better bonus, better than a chocolate croissant on their plates.
Another boon was for those that were the prophets of doom, sounding the alarm for a pending recession, and were proved wrong, since you can’t get a recession with numbers this high; and, the fact that these numbers also came in with rising inflation was another unexpected bonus.
Despite all of the hand wringing in some markets, it’s also clear that the US economy is resilient, even in the face of interest rate increases by the Federal Reserve to tamp down inflation.
The good news gets better with an approximate gain of 380,000 job gain, on average, over the past quarter, well above pre pandemic levels, even if slower than the prior year, and even better, has replaced nearly all of the near 21 million jobs lost in the private sector that began in February 2020, with few exceptions.
Who gained? For the last few months it was leisure and hospitality, that also takes in hotels and bars, had topped the list, but this time it was professional and business services that led at 74,000, and the former at 67,000 jobs still nothing to sneeze at despite a second place showing. But, of note it still is 1.3 million down from February 2020 benchmark measures.
If you strip out the bars and restaurants you get 41,000, and for those in health care, take a breath, because your area added 57,000 jobs, but building back a loss was 29,000 jobs gained in manufacturing, and those online purchases helped push 759,000 jobs forward of its pre pandemic posts.
Taking a closer look we can see that labor force participation, a key indicator, took a tumble from 62.3 percent in May to 62.2 for June and this can be problematic, for as The Hill noted, “If fewer Americans are seeking jobs, businesses may have to offer increasingly higher wages to compete for workers. Firms may also raise prices for their goods and services as they attempt to meet rising demand without a large enough staff, which could fuel higher inflation.”
There is still a discrepancy between Blacks and Whites, especially for Black women, perhaps related to child care, as with their white counterparts, and CNBC reported that “The unemployment rate for Black women fell to 5.6% in June, down from 5.9% in the previous month,” but all things considered, even with a slight decrease overall from May, the picture is relatively stable noted Valerie Wilson, the Economic Policy Institute’s program director on race ethnicity, and economics said: “I think the bigger picture is that all of those numbers are within the range of where they’ve been in the last three months,” she said. “It’s a signal that the recovery is stable.”
Remaining the same is the unemployment rate, the marquee figure as we call it, at 3.6 percent, the same as last month, and with no significant jobs loss then the US is even as Steven, says an old cliche.
According to The New York Times, “We’ve essentially ground our way back to where we were pre-Covid,” said Christian Lundlad, a professor of finance at the Kenan-Flagler Business School at the University of North Carolina. “So this doesn’t necessarily look like a dire situation, despite the fact that we’re struggling with inflation and economic declines in some other dimensions.”
As many observers have noted, these gains may not last, and especially with the recession tools that the Fed has chartered, and as Sen. Elizabeth Warren said last month, with these rate increases comes unemployment.
The Times also observed that with 11.3 million workers in May, a record high, “any workers laid off as certain sectors come under strain are likely to find new jobs quickly, for a time at least.”
For employers that means anxiety around hiring, especially as consumer spending is still facing bottlenecks, and some supply chain issues, those microchips are still not as plentiful. Hiring and filling new positions could be slowwalked, as they noted.
Wages did moderate to 5.1 percent, and wage increases that some employers have chosen to lure employees has also been part of the problem, for those that are concerned about inflation, the Fed included, and as the Times reported, Golddman Sachs officials have said that wages need to slow below 3.5 percent “to be consistent with the Fed’s inflation goals.”
While this would help with the historical goal of 2 percent inflation, prices have to be stable, as Chair Jerome Powell has noted because without it, “the economy’s really not going to work the way it's supposed to be.”
It’s a balancing act, of course, and with inflationary prices hitting 40 year record highs, along with skyrocketing rents, and other basics, too much, is as bad as too little.
