Gallup US Job Creation Index
June’s job creation index was plus 36, just shy of the record high of plus 37 recorded in May. The index has been at or over plus 30 for 16 straight months signifying a greatly improved and steady job market compared with the years during and after the Recession in 2009. Various indicators suggest the US economy is generating new jobs at a steady pace, although only 138,000 jobs were created in May, this report fell short of expectations and was a drop from the more robust government numbers recorded in April. The Gallup job creation index did not show a significant drop in May and has again shown no significant change for June in contrast to these government numbers. In June, 45 percent of employees said their company was hiring, almost matching the 46 percent recorded in May. The percentage who sad their company was letting people go held steady at 9 percent. 41 percent of workers said their employer was not changing the size of its workforce.
Challenger Job-Cut Report
In confirmation that employers are holding onto their employees, Challenger’s layoff count for June is 31,105, the lowest total since October of last year. One industry where layoffs have been heavy, however, has been the retail sector which leads June’s total at 4,217.
Initial jobless claims rose 4,000 in the week of July 1st to 248,000 which remains steady and safely within the consensus range economists predicted. Seven states including California had to be estimated in the week which raises the risk of significant revisions in next week’s report. Continuing claims, where data lags by a week, rose 11,000 in the week of June 24th to 1.956 million with the unemployment rate for insured workers unchanged and very low at 1.4 percent. Estimations aside, this data remains near historic lows and continue to signal strong demand for labor.
Gallup Good Jobs Rate
The June good jobs rate rose to 46.3 percent, from 45.4 in May. The workforce participation rate reached a record high of 68.6 percent. Unemployment and underemployment rates remained steady. While the June 2017 Gallup Good Jobs rate fell short of the high point of 47.1 percent recorded back in July of 2016, it is two points above the average for the rate since the start of this report in 2010- 44.3 percent. It is nearly five points higher than the low point of 41.7 recorded in February of 2011 when the economy was still recovering from the recession. The workforce participation rose 68.6 percent in June, a record high for this measure, though it is equivalent to the 68.5 percent rates set back in April and June of 2013. The participation rate is up from 68.0 percent in May and is one point higher than it was in June a year ago when it averaged 67.5 percent. Gallup’s unemployment rate for June was 5.2 percent, virtually unchanged from May’s 5.3 percent. It matches the rate of 5.3 percent in June 2016. The unemployment rate is near the record low of 4.9 percent recorded in November of 2016, and remains well below the record high of 10.9 percent recorded in January of 2010. The underemployment rate for US adults was essentially unchanged at 13.6 percent in June, compared to 13.9 percent in May. The current underemployment rate is the same as was recorded in June of last year though well below the high of 20.3 percent in March 2010.
The split between strength in demand for labor and weakness in wages is more critical than ever after the June employment report which shows a significant upgrade to payroll growth but a flat line for aver5age hourly earnings. Nonfarm payrolls surged 222,000 in June with revisions to prior months adding another 47,000. The last 3 months of payroll growth were originally very soft but ahve4 now been revised. Not revised is earnings which could manage only a 0.2 percent gain in June with May, which was already weak, revised down another one tenth to a monthly gain of only 0.1 percent. Year on year wages are lifeless at 2.5 percent. The weakness points to low wage, low productivity jobs. But there are more and more jobs led in June by the service sector. Professional and business services lead among the service categories at 35,000 with related temporary help up 13,000. Strength here suggests that employers are unable to fill positions and are turning to contractors. Government jobs were also very strong up 35,000 following a run of uneven results. Retail id rise 8,000 in the month but this is following a string of declines. Gains for goods producers are led by construction at 16,000 and followed by mining at 8,000, and yet another disappointing month for manufacturing at only 1,000.Hours are up in what are additional signs of strength at 34.5 weekly hours overall for a 1 tenth gain with manufacturing also increasing to 40.8 hours. Other data includes a tick higher in the unemployment rate to a still very low 4.4 percent with the pool of available workers continuing to creep lower to 12.4 million. The labor pool may be shrinking but it’s not resulting in stronger wages. Wages are a key driver for inflation and without greater pressure; overall inflation does not look to improve. Still the strength in both employment and hours make June a strong final chapter for the second quarter.