Labor Market Update
Mixed News for The Fed and YOU!
It is Jobs Report Friday! It is my favorite day of the month.
and I have spent our morning reviewing the BLS report. Here are some of the highlights and thoughts we have. In summary, Labor Market is STRONG….maybe too strong.
Total nonfarm payroll employment increased by 209,000 in June, and the unemployment rate changed little at 3.6 percent. In May, the economy created 339,000 new jobs. The slow down in job creation is a good sign for the Fed. However, the Fed would like to slow down job creation to 100-150k new jobs.
The number of persons employed part time for economic reasons increased by 452,000 to 4.2 million in June, partially reflecting an increase in the number of persons whose hours were cut due to slack work or business conditions. Persons employed part time for economic reasons are individuals who would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs. This might be a good sign for the Fed.
ADP report released on Thursday finds that private sector jobs surged by 497,000 in June, well ahead of the 267,000 gain in May and much better than the 220,000 estimate. This is bad news for the Fed.
Hourly earnings increased by 0.4% from the previous month to $33.58 per hour in June. Last June average hourly earnings were $32.18 per hour.
The Takeaway
For the jobseeker, the labor market report indicates that it is still a good time to search for a new job. Firms are hiring, and wages are increasing.
For the Fed, the labor market is not responding to the rate hikes. Whether they increase interest rates again will depend on what the next CPI report says. If the inflation rate falls, and labor market remains strong, the Fed might have managed a “soft landing”.
We will have to wait and see,
Dr. A and Fawwaaz