This morning’s jobs report from the Bureau of Labor Statistics revealed an economy that is moderating, with the US adding 206,000 jobs in June (below the downwardly revised 218,000 additions realized in May and in line with estimates). Over the last three months (April through June), monthly job additions have averaged 177,000 which, outside of the substantial reduction in job growth at the beginning of the pandemic, represents the lowest three month average since 2019 (July through September).
Private education and health services led all industries, adding 82,000 positions in June, while not far behind were government additions (at 70,000). Together, these sectors accounted for almost three-quarters of total job gains, a sharp increase from May, where they accounted for about half of total additions. Notably, construction added 27,000 positions in June, above May’s count of 16,000 and recovering from April’s loss of 5,000. Professional and business services realized a decline of 17,000, with retail trade (at 8,500) and manufacturing (at 8,000) rounding out the remaining industries which experienced losses last month.
The number of unemployed people across the country rose to 6.8 million in June, higher than May’s count of 6.6 million and above the 5.9 million just one year ago. June also marked the highest count of seasonally-adjusted unemployed people since October 2021. The unemployment rate rose from 4.0% in May to 4.1% in June, marking the first time it has risen beyond four percent since November 2021.
Wages were consistent with forecasts as average hourly earnings rose 0.3% between May and June (slightly below the 0.4% seen between April and May). On a year-over-year basis, average hourly earnings climbed 3.9%, cooler than May’s 4.1% and the slowest such increase since May 2021.
While the economy realized steady growth in June, it is clear that this growth is slowing. The unemployment rate has ticked above four percent, wage growth has cooled, and—with May’s jobs report having been revised to a more muted total—the US has now strung together a three month period of average additions that are comparable to 2019 and earlier. Looking ahead, there are many more data releases expected before the fall, but this morning’s report has now created an environment in which a September rate cut is strongly in play.
