Payrolls grew by 80,000 last month and the unemployment rate was unchanged at 8.2% in a jobs report that confirms the slower trend in employment gains that showed up a few months ago.
In order to get a better feel for the underlying trend, it’s useful to average across a few months. With today’s report, we now have job data for the second quarter of the year–such quarterly numbers are less noisy and thus more reliable than the monthly ones.
Over the second quarter, payrolls are up an average of 75,000 per month, compared to 226,000 in the prior three months. First quarter numbers may have been biased up by seasonal effects that failed to reflect the warm winter, so the lower second quarter gains may reflect some “payback.”
Still, I’m inclined to believe that we’ve actually settled into a slower trend, as shown in the figure, and that is really not where we need to be right now. The slowdown is apparent across many industries, including manufacturing, which added 11,000 in June, but averaged 10,000 per month in the second quarter compared to 41,000 in the first. Even so, continued job gains of even small magnitudes in our factory sector are extremely welcome.
The fact that the unemployment rates been stuck north of 8% for months now also confirms the downshift diagnosis.
Today’s report suggests that the downshift looks real, and that’s what should be absorbing policy makers’ time and energy. Unfortunately, in an hotly contested election year, they’re more likely to target each other than to target the job market.
More to come…the wage numbers actually look a bit better than I thought and are likely beating inflation by a bit.