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Friday, July 07, 2023

Comments on June Employment Report

by Calculated Risk on 7/07/2023 10:23:00 AM

The headline jobs number in the June employment report was at expectations, however, employment for the previous two months was revised down by 110,000, combined.  The participation rate and the employment population ratio were unchanged, and the unemployment rate decreased to 3.6%.

Leisure and hospitality gained 21 thousand jobs in June.  At the beginning of the pandemic, in March and April of 2020, leisure and hospitality lost 8.2 million jobs, and are now down 369 thousand jobs since February 2020.  So, leisure and hospitality has now added back about 96% all of the jobs lost in March and April 2020. 

Construction employment increased 20 thousand and is now 339 thousand above the pre-pandemic level. 

Manufacturing employment increased 7 thousand jobs and is now 204 thousand above the pre-pandemic level.

In June, the year-over-year employment change was 3.79 million jobs.

Prime (25 to 54 Years Old) Participation

Employment Population Ratio, 25 to 54Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 participation rate increased in June to 83.5% from 83.4% in May, and the 25 to 54 employment population ratio increased to 80.9% from 80.7% the previous month.

Both are above the pre-pandemic levels and suggest all of the prime age workers have returned to the labor force.

Average Hourly Wages

Wages CES, Nominal and RealThe graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  

There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 4.4% YoY in June. 

Year-over-year wage growth will likely slow further next month since wage growth was strong in July 2022.

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"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."
The number of persons working part time for economic reasons increased in June to 4.191 million from 3.739 million in May. This is below pre-recession levels.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 6.9% from 6.7% in the previous month. This is down from the record high in April 22.9% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.5%). (This series started in 1994). This measure is below the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.105 million workers who have been unemployed for more than 26 weeks and still want a job, down from 1.188 million the previous month.

This is at pre-pandemic levels.


The headline monthly jobs number was at expectations; however, employment for the previous two months was revised down by 110,000, combined.   

Overall, this was a solid employment report.