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  • Writer's pictureNick Andriacchi

June Jobs Report

The latest jobs report was mostly positive on the surface, but if you dive a little deeper, there is some undercurrent that shows a glass half full / empty scenario.

Glass Half Full

June’s top-line number came in better than expected (372,000 vs 250,000). Strong gains in education, health care, professional services, and leisure and hospitality. The U6 number fell under 7% which is a good sign that people are finding better paying jobs. The JOLTS report was also strong with 11.3 million open jobs at the end of May.

Glass Half Empty

Wages increases, while healthy (+.3%, 5.1% annually) were below the high mark reached in March (5.5%) and way below the inflation rate (+9.1%). First time jobless claims (still low) have risen to a 6-month high. There was some disparity between the Establishment Survey and the Household Survey. The household survey showed 315,000 jobs lost, leaving the total jobs count 755,000 shy of its February 2020 pre-pandemic level.

The CPI released this week came in at 9.1%, higher than economists' expectation. This provides a clue on how aggressive the FED will be with the next interest rate move.




· The economy added 372,000 jobs in June, more than expected, and wages grew by a solid 0.3%, or 5.1% year over year.

· The labor participation rate fell in June both overall and the prime age group (ages 25 – 54). We really the workforce to return to pre-pandemic levels to help stave off inflation and stabilize the talent force.


· Job openings slid again through May (11.3mm available jobs) as the labor shortage seemed to ease slightly. Jobs still outnumber talent by 2 to 1.


· As mentioned, average hourly earnings eased a bit up 5.1% over the last 12 months. Looking closer at May’s JOLTS report, there were decreases in openings for higher paying jobs and increases in openings for lower paying jobs. Based on this and other factors, wage increases should continue to moderate.


Analysis of the June Employment Report

• A more encompassing measure of unemployment (U6) that includes discouraged workers and those holding part-time jobs for economic reasons fell to 6.7%.


• Prime age labor force participation rate (ages 25-54) was down this month to 82.3%. I view this number as very disappointing as and it is still off by .7% from February 2020, the last month before the pandemic started.

• The overall labor force participation is 62.2% down .1% from last month.

• In June, average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents, or 0.3 percent, to $32.08. Over the past 12 months, average hourly earnings have increased by 5.1 percent. In June, average hourly earnings of private-sector production and nonsupervisory employees rose by 13 cents, or 0.5 percent, to $27.45


• The average workweek for all employees on private nonfarm payrolls was 34.6 hours for the fourth month in a row. In manufacturing, the average workweek for all employees was little changed at 40.4 hours, and overtime fell by 0.1 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained unchanged at 34.1 hours.

• APD is retooling their monthly report. Estimated publishing date August 31st 2022


Source: ADP, BLS, CNBC, ABC News

https://www.bls.gov/news.release/archives/jolts_02092021.htm

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


JOB OPENINGS AND LABOR TURNOVER – MAY 2022


The number of job openings decreased to 11.3 million on the last business day of May, the U.S. Bureau of Labor Statistics reported today. Hires and total separations were little changed at 6.5 million and 6.0 million, respectively. Within separations, quits (4.3 million) and layoffs and discharges (1.4 million) were little changed. 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 and rate of job openings decreased to 11.3 million (-427,000) and 6.9 percent, respectively. The largest decreases in job openings were in professional and business services (-325,000), durable goods manufacturing (-138,000), and nondurable goods manufacturing (-70,000).


Hires


In May, the number of hires was little changed at 6.5 million. The hires rate was unchanged at 4.3 percent. Hires decreased in finance and insurance (-40,000). (See table 2.)


Separations


Total separations includes 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 includes separations due to retirement, death, disability, and transfers to other locations of the same firm.

In May, the number of total separations was little changed at 6.0 million. The rate was unchanged at 3.9 percent. Total separations decreased in real estate and rental and leasing (-30,000) and in state and local government education (-28,000).


In May, the number and rate of quits were little changed at 4.3 million and 2.8 percent, respectively. Quits decreased in real estate and rental and leasing (-33,000) and in state and local government education (-19,000). Quits increased in arts, entertainment, and recreation (+19,000).


In May, the number of layoffs and discharges was little changed at 1.4 million. The rate was unchanged at 0.9 percent. Layoffs and discharges increased in wholesale trade (+24,000) and in federal government (+4,000).

The number of other separations was little changed in May at 324,000. Other separations decreased in state and local government education (-12,000) and in educational services (-3,000). Other separations increased in real estate and rental and leasing (+6,000).

Net Change in Employment

Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining.

Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising.

Over the 12 months ending in May, hires totaled 78.4 million and separations totaled 72.0 million, yielding a net employment gain of 6.4 million. These totals include workers who may have been hired and separated more than once during the year.

Establishment Size Class

In May, the job openings rate decreased in establishments with 250 to 999 employees. The quits rate decreased in establishments with 250 to 999 employees and in establishments with 5,000 or more employees. For a more in-depth description of the JOLTS establishment size class estimates, please visit


www.bls.gov/jlt/sizeclassmethodology.htm.

____________

The Job Openings and Labor Turnover Survey estimates for June 2022 are scheduled to be released on Tuesday, August 2, 2022 at 10:00 a.m. (ET).





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