June 2024 Employment Report:
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Job seekers attend the JobNewsUSA.com South Florida Job Fair held at Amerant Bank Arena on June 26, 2024 in Sunrise, Florida.
Joe Raedle | Getty Images
The U.S. economy still created slightly more jobs than expected in June, although the unemployment rate rose, the Labor Department reported Friday.
Nonfarm payrolls rose 206,000 for the month, better than the Dow’s forecast of 200,000 but less than the downwardly revised 218,000 increase in May, which was sharply reduced from the initial estimate of 272,000.
The unemployment rate unexpectedly rose to 4.1%, the highest level since October 2021, and sent a mixed signal to Federal Reserve officials considering their next monetary policy move. The forecast had called for the unemployment rate to remain stable at 4%.
“The labor market is softening but not breaking, which strengthens the case for a rate cut,” said David Russell, global head of market strategy at TradeStation. “It’s not too hot or too cold. Goldilocks is here and September is in play.”
The increase in the unemployment rate came as the labor force participation rate, which indicates the level of working-age people who are employed or actively looking for work, reached 62.6 percent, up 0.1 percentage points.
The broad unemployment rate, which includes discouraged workers and those working part-time for economic reasons, remained stable at 7.4%. Household employment, which is used to calculate the unemployment rate, increased by 116,000. The household survey also showed a decrease of 28,000 full-time workers and an increase of 50,000 part-time workers.
Although June’s job creation exceeded expectations, it was largely due to an increase of 70,000 jobs in the public sector. In addition, the health sector, which continues to lead, added 49,000 jobs, while social assistance contributed 34,000 jobs and construction saw an increase of 27,000 jobs.
Several sectors saw declines, including professional and business services (-17,000) and retail trade (-9,000).
As for wages, the average hourly wage increased by 0.3% over the month and by 3.9% compared to the previous year, which is in line with estimates. The average weekly working time remained stable at 34.3 hours.
Stock market futures rose slightly after the report, while Treasury yields were negative.
In addition to the substantial revision to the May payroll number, the Bureau of Labor Statistics lowered the April payroll number to just 108,000, down 57,000 from the previous estimate.
Long-term unemployment rose sharply in the month, up 166,000 to 1.5 million, from 1.1 million a year ago. The BLS said the share of long-term unemployed as a percentage of the total unemployment level was 22.2%, up from 18.8% a year ago.
The unemployment rate for Black workers climbed to 6.3%, its highest level since March. The rate for Asian workers jumped one percentage point to 4.1%, its highest level since August 2021.
The report comes as Federal Reserve officials consider their next monetary policy moves.
At their last meeting, policymakers said they needed to see more progress on inflation before cutting interest rates, while noting that a strong economy and particularly a solid labor market lessened the urgency to act in the near future, according to minutes released earlier this week.
Despite indications to the contrary, markets are pricing in two rate cuts, assuming quarter-percentage-point reductions, before the end of 2024. At the June meeting, Fed officials considered only one cut, saying they needed to see “additional supportive data” before making any cuts.
“There are no cracks that would prompt the Fed to come to the rescue by cutting rates, and the labor market is in line with continued slowdown in inflation,” said Robert Frick, corporate economist at Navy Federal Credit Union. “That should lead to a rate cut or two this year.”
The Fed is targeting its key rate in a range of 5.25% to 5.50%, the highest in 23 years and a level it has been at for about a year.
Signs of cracks have recently emerged in the labor market, with surveys of purchasing managers showing a contraction in hiring in both manufacturing and services.
In addition, overall economic growth is slowing. Gross domestic product grew at just a 1.4% annualized rate in the first quarter and is expected to grow at just a 1.5% pace in the second quarter, according to the Atlanta Fed.
News Source : www.cnbc.com
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