The latest Jobs Report shows the US keeps adding jobs: we added 206,000 payroll jobs in June. America is hard at work! The trend shows a moderation in how many jobs we keep adding each month (see Exhibit 1).
The unemployment rate crept up to 4.1% (see Exhibit 2).
How can we add jobs and still have the unemployment rate go up? The payroll jobs number and the unemployment rate number come from two separate surveys. The payroll jobs number comes from a survey of establishments on how many payroll jobs businesses have added. The unemployment rate comes from a survey of households on whether household members are working or looking for work, and it includes self-employment and gig work. Usually these two surveys send similar signals. Occasionally they don’t. This month, the household survey came in weaker than the establishment survey. Additionally, we can be adding payroll jobs but not enough payroll jobs given increases in the working-age population and labor force participation rate to keep the unemployment rate unchanged.
Where have we been adding and losing jobs (see Exhibit 3 and Exhibit 4)? This past month, we added the most jobs in private education & health, government, and construction. We lost jobs in professional & business services, durable goods manufacturing, and wholesale trade.
Overall, this is a good Jobs Report, but it does signal the labor market is cooling and the Fed might want to consider cutting interest rates in September in accordance with its dual mandate of price stability and full employment. We’re making good progress on price stability. We don’t want to undo the progress we’ve made on full employment.
American Consumer 