Weekly Economic Trends and Indicators

The Headlines:

On Friday, the Bureau of Labor Statistics (BLS) reported that U.S. nonfarm payroll employment increased by 57,000 in June. This was well below the market’s expectations, which were over 100,000. The ADP National Employment Report, released the day before the BLS report, cited growth of 98,000 private sector jobs in June.

BLS job growth figures for April and May were revised downward by 31,000 and 43,000, respectively.

The U.S. unemployment rate was little changed from May, moving from 4.3% to 4.2%. Both the labor force participation rate and the employment-to-population ratio moved lower.

The Details:

More than half of the job gains (+39,000) were in service-providing industries, but there was considerable difference across the service sector. Professional and business services jobs increased by 36,000, with most of that in administrative and support services. Private education services increased by 22,200. Health care jobs increased by 21,500, and social assistance jobs increased by (25,100).

On the negative side, it was notable that leisure and hospitality jobs decreased by 61,000. Recall that last month, it was originally reported that jobs increased by 70,000 in leisure and hospitality. However, after revisions to the last two months, leisure and hospitality employment is now reported to have decreased by 21,000 since April. Over the past year, employment in
accommodation services has decreased by about 0.8% while employment in food and drinking places has increased by about 1.0%.

In the household survey, the labor force participation rate, which had been slowly falling for several months but little changed since February, decreased from 61.8% to 61.5% in June. As a
result, the number of people not in the labor force increased by over 800,000. However, the broader measures of unemployment all decreased in June, suggesting that most of the people
who left the labor force did not leave out of discouragement with the labor market.

The Context:

Monthly employment reports have become more noisy in recent months, with large revisions as additional data is received. The revisions to leisure and hospitality employment have been
especially large in the last couple of months. Therefore, this report will probably not change the minds of many people about the current state of the labor market or the economy. CME
FedWatch probabilities of an interest rate increase dropped briefly on Thursday after the report but had partially recovered by Monday as people had a chance to digest the information.

Next week: International update