Robust Job Growth Signals Ongoing Expansion for U.S. Economy
- The June Payroll Employment Survey showed a gain of 288,000 jobs. April and May were revised up.
- The Unemployment Rate for June fell to 6.1 percent.
- Average Hourly Earnings increased by 0.2 percent in June and are up 2.0 percent over the last year.
- The U.S. International Trade Gap narrowed in May to -$44.4 billion.
- Initial Claims for Unemployment Insurance inched up by 2,000 for the week ending June 28, to 315,000.
For the fifth consecutive month, U.S. payroll employment has increased by more than 200,000 jobs. June payrolls increased by a robust 288,000 jobs. These are strong mid-cycle numbers, comparable to the height of the previous business cycle in 2005 and 2006. The June unemployment rate fell to 6.1 percent. We are seeing a decline in the unemployment rate of about 0.1 percentage points every two months, which puts us on pace for a 5.8 percent unemployment rate at the end of this year. The average workweek for June was 34.5 hours, unchanged for the fourth consecutive month. Average hourly earnings were up 0.2 percent for the month and 2.0 percent over the previous 12 months. As long as productivity growth gets back on track, this is not inherently inflationary. However, we expect to see more pressure on wages as labor markets continue to tighten up through the remainder of this year and into next year.
Job gains were widespread across industries. Construction added 6,000 jobs in June. Manufacturing employment was up by 16,000 jobs, with gains concentrated in transportation equipment. Wholesale trade gained 15,100 jobs while retail was up a strong 40,200. Transportation and warehousing added 16,600 jobs in June. Information was up 9,000. Financial services gained 17,000 jobs. Business and professional services employment was up a solid 67,000 jobs in June. Education and healthcare added 38,000. Leisure and hospitality services added 39,000 jobs for the month. Government employment was up by 26,000 in June, somewhat stronger than recent average performance. It looks like the bad winter weather may have extended school years into June, temporarily boosting local government employment. If so, we should see a correction in the July data. Even if we net out 18,000 local government education jobs, the net gain of 270,000 jobs for June is a strong number. Fun fact: We have already added more payroll jobs in the current expansion than we did in the last one, from June 2003 through January 2008.
Initial claims for unemployment insurance for the week ending June 28 ticked up by 2,000 to hit 315,000. Continuing claims for the week ending June 21 increased by 11,000 to hit 2,579,000. Claims numbers remain consistent with ongoing improvement to overall labor market conditions.
The U.S. international trade gap narrowed in May, to $44.4 billion. Exports increased by $2.0 billion for the month, while imports decreased by $0.7 billion. For April and May, the inflation-adjusted balance of trade for goods is below the first quarter average, implying a small drag from trade on Q2 GDP.
Market Reaction: U.S. equity markets opened with gains. The 10-Year T-bond yield is up to 2.66 percent. NYMEX crude is down to $103.82/barrel. Natural gas futures are down to $4.34/mmbtu.
For a PDF version of this Comerica Economic Alert click here: Employment 07-03-14.