June Unemployment = Cold Porridge
The Bureau of Labor Statistics released the monthly employment situation for June this morning and a mixed top line almost hides some really scary internals.
The headline numbers were that June added 223k jobs which, by government counting standards, dropped the unemployment rate to 5.3%.
Black unemployment still leads all other demographics at 9.5%.
Some important revisions to the April and May numbers were announced as well. April was reduced from +221,000 to +187,000 jobs and May revised down from +280,000 to +254,000 – a 60k job reduction in total.
With the revisions in place, and supposing that June takes a similar 30k reduction, June appears to show a drop from May and only a slight increase from May. Not too hot, not too cold – just right…
The jobs increases came mainly in the areas of healthcare, retail and professional services with smaller gains in transportation and warehousing. But 71,000 jobs were lost in the mining sector mainly due to petroleum price-driven reduction in drilling rig counts and continued losses in coal mining due to over-regulation.
The remaining internals show an incredible weak jobs market where no wage inflation is likely any time soon.
People of working age that actually had jobs in June dropped by 432,000 people which dropped the labor force participation rate to 62.6% – the worst showing since October of 1977 (remember 1977?) This drop is not a one-time-off thing – May saw the labor force drop by almost the same amount. The reduction is illustrative of a jobs market that is not keeping up with graduation rates and those coming of age to work.
An area of concern is youth employment stayed at 18.1% despite the overall unemployment rate decrease. Are more adults taking jobs traditionally held by teenage workers?
A look at underemployment reveals another concern. The number remains steady at 6.5 million. That’s almost 7 million people that have taken part-time work that would rather have a full-time job. This likely continues to provide pressure on the underskilled and youth workforce.
The remainder of the drop in the labor force is likely due to those just giving up on finding work. Boomers will just retire and take their social security. Younger workers have been flocking to disability if they can get it.
While the headline numbers fit the “Goldie-locks” – not too bad, not too good – scenario, the internals look like pure, cold porridge.