U.S. Jobs: Happy Days Are Here Again (Again)
OK everybody, it's time to heave a sigh of relief. With the latest set of job numbers from the U.S. Bureau of Labor Statistics in hand, I'm pleased to report that things are more or less back to normal. May brought us a shocking downturn: The original reporting pegged just 75,000 jobs added, a figure actually revised downward to 72,000 in this latest report.
Over the last year or two, however, we've more commonly seen numbers in the range of June's reported 224,000 jobs. So it would seem that May was a troubling outlier, but not a new trend. Unemployment rose to 3.7 percent (the highest since last April), but anything under 4 percent is regarded as full employment. Hence, we have far more good news than bad news there as well.
Prior to Friday's report, the consensus job growth forecast from labor economists hovered around 160,000. Thus, the actual numbers exceeded the forecast by a whopping 29-plus percentage points. This creates a good news/bad news situation.
The good news is that this surge in economic growth pushes us back up into the zone we were in before recent trade disputes and tariff tangles started messing with markets. The bad news is that, with growth back to normal, the Fed will be less inclined to lower interest rates at their next quarterly meeting, as many had hoped they might.
Where's the Growth?
As usual, big gainers in job growth included healthcare and professional and business services. The latter added 51,000 jobs in June, ahead of the 31,000 monthly trailing average for the first half of 2019. The former added 35,000 jobs in June, also ahead of the trailing 12-month average of 33,500 jobs, if not by much.
More surprising (and welcome!) gains came from construction (+21,000 jobs) and transportation and warehousing (+24,000, almost double the 12-month trailing average of 13,000 jobs). Manufacturing also showed a modest gain of 7,000, with all other sectors mostly flat (mining, wholesale trade, retail trade, information, financial activities, leisure and hospitality, and government).
What's the Bottom Line?
Major news outlets heaved a sign of relief that things are back to normal, more or less, in this latest jobs report. I share this feeling, and am glad to see things making some kind of basic and historical sense. But it's a roller coaster ride for sure — please hang on for the next dips and turns when I come back with next month's numbers.