The headlines of the June employment report are that the economy added 195,000 jobs and the unemployment report remained at 7.6%. Beneath the surface, the report is generally good (by today's standards!). Revisions show an extra 70,000 jobs created in April and May than previously estimated (employment is now up 2.3 million over the last 12 months). Also, the participation rate rose slightly to 63.5%. Average weekly wages rose by 0.4% (strong for one month) and is up 2.2% over the last year (not as strong, but OK). Which industry added the most jobs? Food services and drinking places added nearly 52,000 in June and almost 100,000 over the last two months. Other industries adding jobs include "amusement, gambling, and recreation," which added about 19,000 jobs in June and over 40,000 in the last two months. Housing and auto-related industries (construction, auto manufacturing, retailers related to housing and autos, ...) added just over 35,000 jobs. Local government employment (other than education) rose by 15,000 and is now up by more than 25,000 since June 2012.
What are the negatives in the report? The broad measure of unemployment (U6) rose from 13.8% to 14.3% (the largest increase since Spring 2009) due to a surge in the number of people working part time for economic reasons. Both figures reversed declines from earlier this year. The number of people working part time for economic reasons are now higher than a year ago while U6 is close to where it was at the beginning of the year (and last Fall). Also, as noted earlier, a disproportionate number of jobs are in relatively low paying industries, such as food services and drinking places, though less than in prior months.
What are the key takeaways? The job market is relatively strong (OK by historical standards, but strong compared to recent history), adding just under 200,000 jobs a month for the last 3 months (many in low-paying industries). This contrasts with economic growth, which has been quite weak in the last 9 months (0.4% in 2012Q4, 1.8% in 2013Q1, and forecasted to be around 1.5% in 2013Q2). How are financial markets reacting to the new data? As of 9am Friday morning, ten-year bond yields are now about 2.7%, the highest since July 2011, reflecting in part concerns as to how a strengthening job market will affect the Fed's timetable in tapering QE3.
