While May’s low total number of jobs added was called “dismal” by one economist and May's employment report was called a “dud” by another, June’s employment situation from the Bureau of Labor Statistics fared somewhat better.
The BLS reported 287,000 jobs added in June, a far cry from May’s total of 11,000 (downwardly revised from the original total of 38,000), which was the lowest total for any one month in six years. One economist said the June report will “allay fears” that a recession is imminent and another called the report a “sigh of relief.” Overall, 414,000 people were added to the workforce in June, which raised the labor force participation rate up by 10 basis points to 62.7 percent. It also raised the unemployment rate by 20 basis points up to 4.9 percent; however, the more comprehensive unemployment rate, the U-6 rate, declined from 9.7 percent in May to 9.6 percent in June.
The average hourly wage rose by only 2 cents up to $25.61 following a 6-cent hike in May, and average hourly earnings have increased by 2.6 percent since June 2015.
“The June jobs report will come as a sigh of relief,” said Curt Long, Chief Economist with the National Association of Federal Credit Unions. “Despite a downward revision to the already weak May figure, the rebound in June means that the average monthly gain in 2016 exceeds 170,000, which is more than enough to absorb new entrants. The participation rate also saw a mild bounce back after dropping in the previous two months. Meanwhile, wage growth remained subdued, but it continues to outpace inflation and is consistent with a tightening labor market. While numerous landmines remain on the economic front, policy makers can at least be reassured that the labor market remains a bright spot. Nevertheless, this does not change the outlook for the Federal Reserve, which is unlikely to raise rates until the fourth quarter at the earliest.”
While June’s lofty job increase total “will allay fears that a recession is under way or imminent,” according to Fannie Mae Chief Economist Doug Duncan, it doesn’t really do anything to brighten the forecast for housing for the remainder of the year.
“There was nothing in the report to encourage housing supply enthusiasts,” Duncan said. “No increase in construction employment during the month, and the three-month moving average fell for the first time in four years. That is consistent with recent housing starts data and offers no near-term hope of housing supply growth to offset strong house price appreciation trends and related affordability constraints. Without supply growth, decreases in interest rates are translating into house price increases in the presence of employment and household formation growth.”
Duncan noted that the components of June’s employment summary outside of the total job gains, such as wage growth and a flat workweek (34.4 hours for the fifth consecutive month), were “uninspiring.”
Trulia Chief Economist Ralph McLaughlin said that June’s job gains “ushered in relief that the U.S. labor market is doing well in a maturing economic cycle” but at the same time, he too was not optimistic about housing.
“Although the rate of year-over-year job growth appears to be flattening, the short-run impact on housing is likely to be negligible,” McLaughlin said. “Not only is tight inventory keeping prices buoyed in many markets, growth in residential construction employment is out pacing total job growth by a factor of two.”
Click here to view the entire June employment situation.