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  • Writer's pictureNick Andriacchi

As Staffing Levels Normalize, Inflation Dies Down - June Jobs Report

Updated: Jul 14, 2023

The Highlights:

  • Temp Help lost 12,600 jobs and revised down (3,900) in May.


  • 209,000 jobs created were below economists’ expectation. Government hiring accounted for 60,000 jobs so private sector growth was much slower in June.


  • April and May jobs numbers were revised down -77,000 and -33,000 respectively.


  • The JOLTS report estimates that there are 10.1mm open jobs.



The Fed is really in tune with the labor report when it comes to making policy on interest rates and the money supply. While most economists and the markets predict an interest rate hike this month – I’m not so sure. Here’s why:


· Wage growth was a little higher than expected. Slower or negative growth in lower paying jobs probably had some effect on this number.

· But inflation has been trending down for months.

· The U6 number grew unexpectedly.

· Temp Help lost jobs again last month.


These are not indicators of a white-hot economy. Productivity can absorb wage increases.


Prime age (24 – 55 years old) labor participation increased to 83.5% which is the highest in 21 years! The overall labor participation rate still remains below pre-pandemic levels so there are still younger workers that will enter the marketplace and some older workers may return to the talent force.


There and other reasons unrelated to payroll (like looming commercial real estate crisis) that the Fed should factor in before deciding to raise rates again.


For a deeper dive….


· A more encompassing measure of unemployment (U6) that includes discouraged workers and those holding part-time jobs for economic reasons rose to 6.9%.


· Prime age labor force participation rate (ages 25-54) was up .1% to 83.5%.


· The overall labor force participation was flat at 62.6% (4th month in a row). This number is disappointing as it still sits .6% below the level of February 2020.


· In June, average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents, or 0.4 percent, to $33.58. Over the past 12 months, average hourly earnings have increased by 4.4 percent. In June, average hourly earnings of private-sector production and nonsupervisory employees rose by 11 cents, or 0.4 percent, to $28.83.


· The average workweek for all employees on private nonfarm payrolls edged up by 0.1 hour to 34.4 hours in June. In manufacturing, the average workweek was unchanged at 40.1 hours, and overtime was unchanged at 3.0 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.8 hours.


· APD is reported that a whopping 497,000 jobs were added last month.


Source: ADP, BLS, CNBC, Fox News




JOB OPENINGS AND LABOR TURNOVER – MAY 2023


The number of job openings decreased to 9.8 million on the last business day of May, the U.S. Bureau of Labor Statistics reported today. Over the month, the number of hires and total separations were little changed at 6.2 million and 5.9 million, respectively. Within separations, quits (4.0 million) increased, while layoffs and discharges (1.6 million) changed little. This release includes estimates of the number and rate of job openings, hires, and separations for the total nonfarm sector, by industry, and by establishment size class.


Job Openings


On the last business day of May, the number of job openings decreased to 9.8 million (-496,000), following an increase in April. In May, the job openings rate declined by 0.3 percentage point to 5.9 percent, offsetting an increase of the same magnitude in the prior month. In May, the largest decreases in job openings were in health care and social assistance (-285,000), finance and insurance (-139,000), and other services (-78,000). Job openings increased in educational services (+45,000), state and local government education (+37,000), and federal government (+24,000).


Hires


In May, the number and rate of hires changed little at 6.2 million and 4.0 percent, respectively. Hires increased in durable goods manufacturing (+41,000).


Separations


Total separations include quits, layoffs and discharges, and other separations. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations include separations due to retirement, death, disability, and transfers to other locations of the same firm.


The number and rate of total separations in May changed little at 5.9 million and 3.8 percent, respectively. Over the month, the number of total separations increased in retail trade (+113,000).


In May, the number and rate of quits increased to 4.0 million (+250,000) and 2.6 percent, respectively. The number of quits increased in health care and social assistance (+69,000) and in construction (+57,000).


In May, the number of layoffs and discharges changed little at 1.6 million, and the rate held at 1.0 percent. Layoffs and discharges increased in retail trade (+87,000).


The number of other separations was little changed in May at 301,000.


Establishment Size Class


In May, establishments with 1 to 9 employees and establishments with more than 5,000 employees saw decreases in their job openings rates.

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The Job Openings and Labor Turnover Survey estimates for June 2023 are scheduled to be released on Tuesday, August 1, 2023, at 10:00 a.m. (ET).


https://www.bls.gov/news.release/jolts.nr0.htm

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