June 2015 Employment Report

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According to the Bureau of Labor Statistics’ (BLS) establishment survey, non-farm payroll employment increased by 223,000 jobs in June -- below expectations of 230,000. Moreover, combined April and May employment gains were trimmed by 60,000 (April: -34,000; May: -26,000). Meanwhile, the unemployment rate (based upon the BLS’s household survey) dropped to 5.3% as 432,000 persons left the workforce and thus are no longer considered unemployed. 

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Observations from the employment report include:

* The disparity in jobs gains between the establishment (+223,000) and household (-56,000) surveys was quite noticeable.

* The downturn in oil-sector (part of the Mining & Logging category) employment moderated.

* Over 60% (136,000) of job growth occurred in the sectors typically associated with the lowest-paid jobs: Professional & Business Services: +64,000; Education & Health Services: +50,000; and Leisure & Hospitality: +22,000. This is a persistent issue, as we have repeatedly highlighted: There are 1.41 million fewer manufacturing jobs today than at the start of the Great Recession in December 2007. Nearly 1.39 million Food Services & Drinking Places (i.e., wait staff and bartender) jobs have been added during that time period, however. 

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* The employment-population ratio ticked down (-0.1%) to 59.3% -- the level it has been at during five of the last six months; also, the number of employment-age persons not in the labor force surged (+640,000) to a new record above 93.6 million. 

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* The labor force participation rate dropped 0.3 percentage point, to 62.6%. Average hourly earnings of all private employees were unchanged at $24.95, resulting in a 2.0% year-over-year increase. For all production and nonsupervisory employees (pictured above), hourly wages rose $0.02 (+1.9% YoY). With the CPI running at an official rate of 0.0% (YoY), wages are technically rising in real (inflation-adjusted) terms. The average workweek for all employees on private nonfarm payrolls remained at 34.5 hours in June. 

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* Finally, full-time jobs decreased (-349,000) while part-time jobs increased (+161,000). Full-time jobs have been trending higher since December 2009, but are still 822,000 short of the pre-recession high (even while the non-institutional civilian population has risen by an estimated 17.7 million). Part-time jobs, by contrast, have been stuck in a channel between roughly 27 and 28 million.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.