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Employment Situation: Moderate Job Creation, Unemployment Increases

July 8, 2016
Bottom Line: Payroll employment rose by 287k in June, compared with market expectations for an increase of 180k, its highest level since October 2015. There were modest revisions to the previous two months which subtracted a total of 6k jobs. Typically in the last 5 years following a large downside surprise there has been a strong upward revision. Instead this report saw May revised DOWN from 38k to 11k but June much stronger than expected. Job creation has averaged only 147k over the last 3 months, a falling trend relative to the 6-month average of 172k and the 12-month average of 204k. The unemployment rate rose in June by 0.2% to 4.9% as household employment grew less than the increase in labor force. Over the past year, the unemployment rate has declined by 0.4 percentage points, the result of 2,375k more people finding jobs as 1,896k more people entered the labor force. Both hourly and weekly earnings rose slightly in June after a modest increase in May. The workweek was unchanged at 34.4.

Payroll Employment ROSE by 287k in June, compared with market expectations for an increase of 180k. The prior 2 months were revised, lower in May by 27k and higher in April by 21k. Government jobs ROSE by 22k. Consequently, private sector jobs ROSE by 265k. Overall employment is now 1.7% ABOVE its year ago level. Over the past 12 months, 2,451k jobs have been created.

In June, the job gains were in Trade, Transportation & Utilities (+27k with 30k of those in Retail Trade), Professional & Business Services (+38k with the addition of 15k in Temp Help Services), Education & Health Services (+59k), Leisure and Hospitality (+59k), Information (+44k), Government (+22k), Financial Activities (+16k), Manufacturing (+14k) and Other Services (+13k).

The Unemployment Rate ROSE by 0.2 percentage points in June to 4.9%, compared with market expectations for a small increase to 4.8%. Household employment rose by 67k while the labor force increased by 414k, resulting in an increase in the number of unemployed of 347k.

The Labor Force Participation Rate ROSE by 0.1 percentage points to 62.7%. The Employment-Population Ratio FELL by 0.1 percentage points to 59.6%.

The number of people Working Part-Time for Economic Reasons FELL by 627k to 5,745k. while Long-Term Unemployment ROSE by 94k to 1,979k (accounting for 25.4% of the unemployed), while the Mean Duration of Unemployment ROSE by 1.0 weeks to 27.7 weeks. There are now 7.8 million people officially unemployed. In addition, there are another 5,692k people who say they want a job but are not currently looking for one. Finally, another 5,745k people are working part-time because of slack economic conditions.

Hourly Earnings ROSE by 0.1% in June, below market expectations of 0.2%. Hourly earnings are now 1.7% ABOVE their year ago level. Weekly Earnings also ROSE by 0.1%, the result of the change in hourly earnings and a steady workweek. Weekly earnings are now 2.3% ABOVE their year ago level.

The Average Workweek was UNCHANGED at 34.4 hours, in line with the market consensus.

The Index of Aggregate Hours ROSE by 0.2% and the Q2 average grew (0.8%) slower than in Q1 (1.7%).
Article by contingentmacro