Private sector employment grew for the 28th consecutive month in June, but it rose just 84,000. The pace of payroll growth was about half the average rate of gain in the preceding 27 months. Declines in government employment offset some of the June growth in private payrolls, so total employment rose by only 80,000. Since April, net job gains in the BLS employer survey have averaged 75,000 a month, a pace that is too slow to keep the unemployment rate from rising. Job growth averaging between 90,000 and 100,000 a month is needed to hold the unemployment rate constant.
The Labor Department’s household survey offers a brighter picture of job gains in May and June. The number of adults reporting they hold a job increased 128,000 in June following an estimated employment gain of 422,000 in May. Since January the household survey has shown employment growth averaging 156,000 a month, about one-quarter faster than the pace of job gain shown in the BLS employer survey. Neither survey shows a robust or sustained improvement in employer demand since the start of the year. If the economy were near full employment, the pace of job gains would be neither surprising nor disappointing. In an economy in which the unemployment rate has exceeded 8.0% for 41 months, however, the job gains represent an intense disappointment.
Some indicators of job market distress show improvement. The median duration of an unemployment spell in progress fell in June. It is almost 10% below the median unemployment duration in June 2011. One reason unemployment spells are shorter is the drop in the number of long-term unemployed. The number of workers with jobless spells longer than 6 months fell 41,000 in June, and it has fallen more than 890,000 since June 2011. Part of this drop is explained by the fact that some of the long-term unemployed have given up their search for work. In a healthier job market, many of these workforce dropouts would resume their search and be counted among the unemployed. It is nonetheless a promising sign that the dropouts are not being replaced by new waves of jobless workers joining the ranks of the long-term unemployed.
Most indicators of job market turnover suggest that the rate of involuntary layoff remains low. New claims for unemployment insurance are not particularly high, and the BLS survey of labor market turnover shows a layoff rate that is lower than it was at the end of the last economic expansion. Current job market weakness is mainly explained by feeble employer demand for additional workers. There is no evidence of a collapse in domestic or foreign demand that is forcing U.S. employers to dismiss their current workers.
[On the ongoing trade negotiations] If we’re serious about resolving the core issues that the U.S. has with China, then this is going to be a way station that’s going to require a lot more continued focus by the administration for a number of months if not years.