INDICATOR: June Employment Report
KEY DATA: Payrolls: +195,000; Private Sector: +202,000/Unemployment Rate: 7.6% (unchanged)
IN A NUTSHELL: “Businesses are hiring solidly and if they keep it up, it will be only a matter of time before the unemployment rate starts coming down consistently.”
WHAT IT MEANS: So much for the weak labor market. The economy added jobs at a solid pace in June and April and May were revised upward as well. Over the past three months, the private sector has added jobs at a 200,000 pace. This is the level that we need to hit and exceed consistently if the unemployment rate is to come down almost every month. The gains were largely across the board. Leading the way was leisure and hospitality. Apparently, people are eating out again like crazy. Restaurants accounted for nearly thirty percent of the total increase. That makes me a little less irrationally exuberant about the top-line number. A solid rise in construction indicates that the housing boom is continuing to add to payrolls. There were other reasons to be happy with this report. Importantly, wages rose strongly so personal income should be up solidly. Other the other hand, there were continued cut backs in public education and a drop in manufacturing. Also, slack business conditions led to a jump in the people working part-time. While that is not good to see, at least businesses are hiring. Keep in mind, the number of people working part-time because that is the only type of position they could find fell. The issue of part-time is important because those jobs don’t create as much income and the workers are still considered employed. That helps explain what is happening with the unemployment rate. It remained at 7.6% despite a rise in the labor force and the participation rate. People are coming back into the workforce and finding jobs, but many of them are part-time.