The Jobs Report – June 2023

Highlight

The June employment report showed the economy added 209K jobs missing the consensus estimate of 230K.  Both April and May were revised down by a combined 110K jobs. Private payrolls added 149K jobs, also missing the estimate of 200K. This is the smallest monthly job gain since February 2021.

What you need to know:

• The household survey rebounded from last month’s job loss to show a gain of 273K which reduced the unemployment rate to 3.6% from 3.7% last month. Although more volatile than the establishment survey, the household survey’s 6 month average job gains are 292K compared to the establishment’s 278K. 
• The goods producing sector had a gain of 29K up from last month and April. This is surprising given the weakness in the manufacturing ISM during that time. The service sector gained 120K jobs, a slowdown from May’s 236K. The largest contributor to service sector gains was education/health services which added 73K jobs. Despite overall gains, several sectors had losses, including retail which lost 11K jobs and transportation/warehousing with a 7K loss. Government added 60K jobs in June. 
• Wages accelerated from 4.3% to 4.4% YOY. For the first time in a while, workers are seeing wages growing faster than inflation. This is good news for workers. 
• This report shows a continued slowing jobs growth as the 6 month average decelerated from 354K at the beginning of the year to 278K this month. Wage gains have been steady and are not showing signs of overheating. The effects of the Fed tightening are starting to show in more and more economic data especially the manufacturing sector. Given the recent hawkish comments from the Fed chairman, we expect this report will not prevent the Fed from raising rates again in July. However, the trend suggests the end of hikes may be near.