The U.S. added 209,000 jobs in June, missing expectations of 230,000 according to Labor Department data, in a sobering sign of a weakening jobs market. Despite the drop off in job growth, the unemployment rate remained steady at 3.7%. Analysts are now questioning whether this trend of softness in job growth is an isolated incident or part of a larger trend.
1. U.S. Job Creation Comes Up Short in June
Disappointing Data
The latest U.S. employment report from the Bureau of Labor Statistics shows the job market was sluggish in June. Nonfarm payrolls saw an uptick of 4.8 million – less than the 8 million that economists expected. This was the smallest gain since job openings began recovering in May.
Experts warn the labor market is far from healed and, in some cases, is even deteriorating. The record jump in joblessness in June, particularly among the bottom 30% of wage-earners, is a sign of trouble.
Moreover, the jobs that have been recovered are mainly lower-paying and often come with limited hours or job security. Thus, the nation needs to recover a significant number of higher-paying jobs in the coming months in order to make a real dent in the 8.2% unemployment rate.
What’s more, the jobs report also showed troubling signs in the broader economy. Temporary jobs dropped sharply, for instance, which some economists worry could mean companies are reluctant to add permanent workers.
- Overall, the U.S. labor market still faces significant headwinds that are likely to put a damper on the nation’s economic growth heading into the second half of the year.
2. Unexpected Slowdown in Hiring Last Month
Analysis
The was notable for how far short of projections it fell. Analysts had forecasted growth in the labor market to continue on its upward trend of recent years, especially given the strong economic fundamentals, but instead the opposite occurred. While jobless claims – the metric most often cited as meaningfully predicting performance – remained steady, the pace of net job growth fell to its lowest level in decades.
The decline in hiring appears to have been most pronounced in certain industries, most notably manufacturing and construction. This presents a troubling sign for these sectors, as they had been expected to rebound and make positive contributions to growth, instead of being dragged down. Other more service-oriented industries such as healthcare, education, business and professional services generally continued their strong growth patterns.
At the same time, wage growth continued to inch higher, suggesting that employers were trying to hold onto existing employees and that the overall market remains in good health. That being said, the recent weak job growth was a stark reminder that the labor market is far from inexhaustible, and that employers and policy makers should remain vigilant against further economic shocks.
3. Economists Express Disappointment Over Job Gains
Slight Increase Reveals Growing Disparity Among Economic Sectors
Economists have reported disappointment over recent job gains, especially as the economy continues to respond to shockwaves from the global pandemic. Despite an increase of 467,000 in this past month alone, the number of jobs created across the country only marginally brings the economy back to the place it was before the outbreak. Reports suggest that the slight increase masks the harsh truth of a wide gap in job availability among different sectors.
In comparison to the 1.32 million jobs created in June, July’s numbers show a slow-down in job growth, a sign of concern for economists. The primary markets responding to job gains were leisure and hospitality, professional and business services, retail trade, and government—all with less than 200,000 jobs compared to the same time last year.
Further concern can be seen in the disproportionate nature of the job losses. Women, people of color, and those who are lower on the socioeconomic status ladder have been hit harder by job cutbacks than their white, male, and traditionally affluent counterparts. As job gains have been slow and inequitable, those who have been hardest hit are now least equipped to benefit from economic recovery.
- Economists report disappointment over recent job gains
- Gap in job availability across sectors shows inequity among socioeconomic classes
- Women, people of color, and lower-income people hardest hit
Overall, the June jobs report was another sign of solid economic growth, although missing the widely expected 230K job gain. With wages continuing to rise steadily, economists are hopeful that the job market will remain tight for the remainder of the year. It will be important to continue to watch the monthly jobs reports to see how the changing economy impacts job growth.