July 8, 2016
June 2016 Jobs Report
Unemployment Rate: 4.9 percent
Unemployed Americans: 7.8 million
Employment and Unemployment
- The Department of Labor reported an unemployment rate of 4.9 percent for June, an increase of 0.2 percentage points.
- The jobs report shows an increase of 287,000 nonfarm jobs in June. Employment for April was revised up from 123,000 to 144,000 jobs created; and May was revised down from 38,000 to 11,000. Revisions showed employers added 6,000 fewer jobs in April and May than previously estimated.
- Today’s job growth figure is the highest monthly gain since October 2015 when 295,000 jobs were created.
- Unemployment in June among those ages 16-19 was 16.0 percent, unchanged from the previous month. For people of Hispanic or Latino ethnicity, the unemployment rate was 5.8 percent, up 0.2 percentage points from May. For African-Americans, the unemployment rate was 8.6 percent, up 0.4 percentage points from the prior month.
- The number of long-term unemployed, those unemployed for 27 weeks or more, was 2.0 million. They account for 25.8 percent of the unemployed, up from 25.1 percent in the prior month.
- The “real” unemployment or U-6 rate is 9.6 percent, down 0.1 percentage point from last month. This is the total percentage of unemployed and underemployed workers.
- The “real” number of unemployed Americans is 15.4 million. These are people who are unemployed (7.8 million), want work but have stopped searching for a job (1.8 million), or are working part time because they cannot find full-time employment (5.8 million).
- In June, employment grew by 39,000 in health care; 59,000 in leisure and hospitality; 30,000 in retail trade; and 16,000 in financial activities. Employment in mining fell by 6,000 last month. Since reaching a peak in September 2014, employment in mining has fallen by 211,000.
- While the Federal Reserve raised its main interest rate by 0.25 percent in December 2015, the May employment report raised concerns with the health of the U.S. economy. Recent statements indicate that a rate increase is not anticipated in the short term. Following the Fed’s June 15-16 meeting, Chair Janet Yellen stated: “The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”
- Subsequently, Fed governor Jerome Powell said in a speech, “global risks have now shifted even further to the downside, with last week's referendum on the United Kingdom's status in the European Union. The Brexit vote has the potential to create new headwinds for economies around the world, including our own. The risks to the global outlook were somewhat elevated even prior to the referendum, and the vote has introduced new uncertainties. We have said that the Federal Reserve is carefully monitoring developments in global financial markets, in cooperation with other central banks.” The next meeting of the Federal Reserve’s Federal Open Market Committee is July 26-27.
Labor Force Participation
- The labor force participation rate is 62.7 percent, up 0.1 from last month and remaining near the lowest level in 38 years. The persistently low labor force participation rate shows that millions of Americans are staying on the sidelines. Since October 2013, the participation rate has largely been stuck in a narrow range of 62.5 to 63.0 percent. Prior to the recession, the rate was 66 percent.
- If the labor force participation rate were the same as when President Obama took office, the unemployment rate would be 9.2 percent.
- The share of American adults with jobs in June was 59.6 percent, down 0.1 percentage point from last month. This is nearly 4 percentage points below its pre-recession peak.
- In addition to a decline in the labor force participation rate, the number of persons working part time but wanting full time employment fell by 587,000 in June.
- In June, average hourly earnings for all employees on private nonfarm payrolls increased by 2 cents to $25.61. Over the year, average hourly earnings have risen by 2.6 percent.
- June was the 83rd straight month that year-over-year hourly wage growth has been at or below 2.6 percent. Prior to the recession, wage growth routinely exceeded three percent.
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