According to Friday’s latest Bureau of Labor Statistics report, the U.S. experienced another solid month of employment.
The Federal Reserve is not satisfied with the signs, and will likely raise federal funds rates later in this month.
The June employment report highlights:
Unemployment remains low. The unemployment rate dropped slightly in June from 3,7% to 3.6%. Since March 2022, the unemployment rate has been between 3.4% and 3.7%.
The job growth has slowed. Economists surveyed by Reuters estimated that 225,000 new jobs were created in June.
The employment rate for prime-age workers has reached a new high. Employment rates for workers aged 25 to 54 reached their highest levels since 2001. This means that a higher percentage of people are now employed than in the past two decades.
Government is rapidly hiring. State government (plus 27,000 jobs) and local governments (+32,000) accounted for the majority of new job creations. BLS reports that the average number of jobs added by government in 2023 is 63,000 per month, up from 23,000 per month.
The three industries that saw the most significant growth in employment were: Health care (411,000 jobs), social assistance (24,000), and construction (233,000).
Retail (-11, 000); Temporary Help (-13, 000); Transportation and Warehousing (7.000).
Black unemployment is on the rise again. Black unemployment has risen for a second consecutive month.
How does the Federal Reserve react to this?
This small cooling in employment will not likely stop the Federal Reserve from trying to bring inflation closer to the 2% target. Especially since BLS data shows average wage growth of 4.4%, which is higher than the current level of inflation of 4%.
The Fed stopped raising the Federal Funds Rate in June after 10 successive rate increases. The minutes of that June meeting were published on Wednesday and show that further rate increases are possible.
The CME FedWatch futures tool predicts a 90% probability that the Fed will raise rates at its next meeting, scheduled for July 26.
On August 4, the next employment report will be published.