June Jobs Report: Overall Good, Despite Headlines

Summary

  • The latest jobs report had mixed headlines in the financial media.
  • This is because wage growth missed the expectations of economists but new jobs created beat expectations.
  • We saw a notable shift away from full-time to part-time works this month. Hopefully this is a one-off event and not the start of a trend.
  • Average hours worked increased in manufacturing, boosting average weekly earnings even as hourly earnings disappointed.
  • There remains a considerable amount of slack in the form of sidelined workers, casting doubt on the "full employment" narrative.

Well, it's the first Friday of the month, which means that the Bureau of Labor Statistics has released another Employment Situation Report, colloquially known as the jobs report. In this case, the headline numbers were somewhat mixed. The number of new jobs created came in at 213K, beating the consensus of 195K, but hourly earnings disappointed and the unemployment rate increased. As usual however, one needs to look beyond the headline numbers in order to understand the true situation in the jobs market.

As just mentioned, the number of new jobs created came in at 213K, beating the 195K consensus of the nation's economists. This marks yet another increase in what has thus far been one of the longest periods of employment growth on record. The June number is also one of the strongest prints over the past eight years:

Source: Zero Hedge

However, one of the problems with this headline number is that it makes no attempt to differentiate between differing qualities of jobs. For example, few people would argue that a full-time job is far superior to a part-time one, especially for a person that is trying to support themselves and their family. However, particularly in the years immediately following the last recession, the overwhelming majority of new jobs created were part-time ones. Thus, there were numerous instances of individuals that were formerly working full-time jobs that allowed for a middle-class lifestyle being forced to work multiple part-time jobs just to keep food on the table due to a lack of full-time positions available. While recent months have shown an improvement in this area, June was a clear exception to this. As we can see, the number of full-time workers declined by 89K while the number of part-time workers increased by 145K in the month.

Source: Zero Hedge

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