U.S. Employment Gain Slows in June; Downward Revisions & Rise in Jobless Rate Compromise Picture of Labor Market Strength

Nonfarm payrolls increased 206,000 (1.6% y/y) in June after rising 218,000 in May, revised from 272,000, and 108,000 in April, revised from 165,000. Expectations had been for a 200,000 rise in the Action Economics Forecast Survey. The three-month average change of 177,000 during Q2’24 compared to 267,000 in Q1.

Average hourly earnings increased an expected 0.3% in June following an unrevised gain of 0.4% in May. The y/y earnings increase declined to 3.9% from 4.1%, remaining below the 5.9% high in March 2022.

The unemployment rate, measured in the household survey, rose to 4.1% in June from 4.0% in May. It was the highest rate since November 2021 after having reached a low of 3.4% in April of last year. An unchanged 4.0% rate had been expected. Household employment rose 116,000 after falling 408,000 in May. The labor force increased 277,000 after a 250,000 May decline. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons, held at 7.4%. It was the highest rate since November 2021.

In the payroll survey, private-sector employment increased 136,000 (1.5% y/y) in June after rising 193,000 in May. Construction sector employment increased 27,000 (2.8% y/y) last month after rising 16,000 in May. Factory sector payrolls fell 8,000, unchanged y/y, after holding steady. Mining & logging sector jobs were unchanged (-1.4% y/y) after declining 4,000 in May.

Private service-producing sector employment improved 117,000 in June (1.5% y/y) after a 181,000 May rise. Increases varied greatly amongst service sector categories. Education & health service jobs rose 82,000 (4.2% y/y), about the same as in May while leisure & hospitality employment rose 7,000 (1.7% y/y) after a 22,000 gain. Professional & business service jobs fell 17,000 (+0.3% y/y) after increasing 31,000 in April. Within that category, the number of temporary jobs declined 48,900 (-7.9% y/y) and have fallen consistently since a March 2022 high. Trade, transportation & utilities employment gained 14,000 (0.7% y/y) after rising 22,000 while financial activities jobs rose 9,000 (0.3% y/y) after a 12,000 improvement in May. Information sector employment rose 6,000 (-1.0% y/y) after increasing 5,000.

Government sector payrolls surged 70,000 last month (2.6% y/y) after increasing 25,000 in May. Local government jobs jumped 39,000 (2.5% y/y) after May’s rise of 31,000, while state government employment rose 26,000 (3.1% y/y) after a 9,000 decline. The number of federal government jobs increased 5,000 (2.5% y/y) following a 3,000 rise.

The 0.3% June rise in private-sector average hourly earnings reflected a 0.4% gain (4.9% y/y) in the goods-producing sector which followed a 0.3% improvement in May. Earnings in construction improved 0.3% (4.9% y/y) while factory sector earnings rose 0.5% (4.8% y/y) for the second consecutive month. In the private services-sector, earnings rose 0.3% last month (3.6% y/y) after a 0.4% gain. Professional & business service sector earnings grew 0.5% (4.3% y/y) for the second straight month. Leisure & hospitality earnings strengthened 0.3% (3.8% y/y) after a 0.4% rise. Information sector earnings edged up 0.1% (2.3% y/y) after rising 0.2%. Financial sector earnings held steady (+5.1% y/y) following a 0.5% increase. Private education & health services earnings improved 0.3% (3.1% y/y) after rising 0.4% in May. Trade, transportation and utilities pay inched up 0.1% (3.1% y/y) in June after a 0.4% rise.

The length of the average workweek in the private sector held at 34.3 hours in June for the third straight month. The workweek in the goods-producing sector rose to 40.0 hours from 39.9 hours in May. The construction sector average workweek lengthened to 39.3 hours from 39.0. The factory sector workweek held at 40.2 hours while the average workweek in the private service sector was 33.2 hours for the third straight month. The aggregate weekly hours index in the private sector, a key indicator of production and income, rose 0.1% in June (1.2% y/y) after a 0.2% May increase. The Q2 average increased 1.6% (AR) from Q1’24.

In the household survey, the jobless rate rose to 4.1% as employment rose 0.1% and the size of the labor force rose 0.2%. The labor force participation rate edged higher to 62.6%. The rate for teenagers declined to 37.4%, while for individuals aged 20-24, it rose slightly to 71.0%. For rate for workers aged 25-54, the rate rose to 83.7%, the highest since 2002, and for workers 55 and over, it held at 38.2%.

The employment/population ratio for all workers held at 60.1% in June remaining slightly below where it was twelve months earlier. It remained below its high of 61.1% in February, 2020 just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver's USECON database. Detailed figures are in the EMPL and LABOR databases. The expectations figures are in the AS1REPNA database.