Despite the contraction of the Asian economy, and Britain rocking world markets with its “Brexit” vote to leave the European Union in June, the U.S. economy rebounded in June from lackluster job growth in the previous month. Steve Benen reports, U.S. job market bounces back in a big way:
At this point a month ago, Americans were confronted with the worst jobs report since the end of the Great Recession. The question was obvious: were the numbers an outlier or the start of a serious downturn in the U.S. job market?
This morning that question was answered in a rather emphatic way. The Bureau of Labor Statistics reported this morning that the U.S. economy added 287,000 jobs in June, making it the strongest month for job creation so far this year and the best overall since October 2015. The unemployment rate ticked higher to 4.9%, but that’s not necessarily bad news: more people entered the job market last month, which affects the broader rate.
For the first time in over eight years, we’ve been at or below 5% unemployment for nine consecutive months. What’s more, the dramatic rebound from May to June represents the largest one-month shift in employment since before the recession began.
As for the revisions: April’s job totals were revised up, from 123,000 to 144,000, while May’s were revised down, from 38,000 to an even more woeful 11,000. Combined, that’s a modest loss of 6,000.
Over the last 12 months, the overall economy has created 2.45 million new jobs, which is a pretty healthy number, and if the current pace keeps up, we’re on track to create more than 2 million jobs in 2016, despite May’s dreadful totals. What’s more, June was the 69th consecutive month of positive job growth, which is the longest on record.
Here’s another chart, this one showing monthly job losses/gains in just the private sector since the start of the Great Recession.
Neil Irwin writing for The Upshot at the New York Times reports, What the Seesaw Jobs Numbers Are Really Telling Us:
The job market is fine.
That’s the most important single idea to take out of the June employment report published Friday morning. A month ago it looked as if there might well be an economic slowdown underway to add to the mix of a polarizing presidential election, geopolitical turbulence and violence.
The good news is that doesn’t appear to be the case. The blockbuster 287,000 jobs the Labor Department reported employers added in June surely overstates the pace of improvement, just as surely as the miserable 11,000 jobs reported to have been added in May understated it. (The May number was originally reported as an almost-as-miserable 38,000.) A Verizon strike contributed to the seesaw, but most of it is probably driven by a mix of sampling error and the sometimes-weird effects of seasonal adjustment.
So as a starting point to gauge how the economy is actually doing, we can average the two months. The 149,000 jobs added per month is consistent with many other signs we see, such as steadily positive readings on surveys of businesses about their growth and hiring intentions. It is, however, a step down from the speedier job growth in the recent past. In 2015 the economy added an average of 229,000 jobs a month.
Still, in some ways that slower pace of job creation is utterly foreseeable, and not even necessarily bad news. In the aftermath of the 2008 recession, employers could add jobs almost as rapidly as they wished, because so many unemployed people were waiting on the sidelines of the job market available to be hired.
With the unemployment rate now below 5 percent, it was inevitable that the pace of job growth would slow to something in the ballpark of 100,000 jobs a month. It shouldn’t be surprising, or cause for alarm, that that’s exactly what’s happening in 2016.
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What do the other data buried in the 39-page report tell us about how the economy is doing as we push toward Election Day?
There, the news is mixed. The unemployment rate rose to 4.9 percent for a combination of good and bad reasons. The good news is that the labor force rose by 414,000 people, partly reversing a negative trend from the previous two months. If it continues, that would be a sign that higher wages and steady job growth are coaxing people to work. The bad news is that most of those people didn’t find work; the number of people unemployed rose by 347,000.
Translation: More Americans said they wanted work, but couldn’t find it. But that is in many ways better than indications that they don’t even want work. It suggests that over time they will find jobs and provide a lift to incomes and economic growth, even if they were still on the sidelines in June.
Similarly mixed: Average hourly wages rose only 0.1 percent in June, below the 0.2 percent analysts had forecast. But those numbers are jumpy, and the 2.6 percent rise in hourly earnings over the last year does imply a rising standard of living in this time of very low inflation.
So halfway through 2016, where are we? The economy continues to grow and the job market continues to improve — not at the blockbuster pace that the June payrolls number might imply, but at a steady rate that is likely to put Americans to work and deliver higher wages over time. The fear that the May numbers induced should subside for now.
These numbers are for a period that predates Britain’s vote to exit the European Union, but that, too, is likely to have only indirect effects on America’s economy (through global financial markets, for example).
The job market is what we thought it was: Not great. Not awful. Fine.