The June employment report released this morning was broadly in line with economists’ expectations. There was a modest (net) gain in employment over the month, but this gain was insufficient to absorb the number of new entrants to the labour force. The unemployment rate, therefore, ticked up a notch to 5.8%, as surveyed economists had anticipated. There was another fall in aggregate hours worked, extending the recent trend.
In the details, there was a net employment gain of 7,900 in June, only slightly below the expected gain of 10,000 jobs. This came after an upwardly-revised rise of 19,200 in May. There were big movements beneath the surface, however, with full-time employment bouncing more than 38,000 positions last month (see chart below), but part-time employment plunging more than 30,000. The jobless rate in June was 5.8%, up from 5.7% in May.
The unemployment rate, often the best gauge of overall conditions in the labour market, is likely to be broadly stable in the period ahead. Growth in the economy is decent enough at around 3%, so employment should continue to grow. New jobs, however, will likely be sufficient only to absorb new entrants into the labour force, resulting in the jobless rate staying just below 6%.