Employment enjoyed some unexpected and sizable growth. Layoffs saw an equally large and unforeseen decline. Meanwhile, consumer credit outpaced market expectations.
The nation’s employment situation got a serious shot in the arm with the economy adding 287,000 jobs in June, according to last week’s report from the Bureau of Labor Statistics. Key growth sectors for the job market were the leisure and hospitality industries, healthcare and social assistance, and financial services.
Despite the job gains, the unemployment rate actually increased 0.2 percent from May’s 4.7 percent to 4.9 percent for June, with the number of unemployed people increasing by 347,000 to 7.8 million. However, the reason for the percentage gain was the fact that more people joined the workforce.
“This report should ease any fears that a persistent slowdown or recession is coming soon in the U.S.,” Dean Maki, chief economist at Point72 Asset Management, told the New York Times. “The service sector is where the real strength is, with 256,000 hires. But the gains were widespread across sectors.”
The number of people involuntarily employed on a part-time basis due to reasons such as their hours being cut, or that is the only work they could find, decreased by 587,000 people in June to 5.8 million. The number of people unemployed for 27 weeks or longer — the long-term unemployed — saw little change, accounting for 25.8 percent of the total unemployed population.
Also essentially unchanged was the labor force participation rate — the percentage of the employable portion of the population that was either employed or actively looking for work — which hovered at 62.7 percent for the month.
Initial Jobless Claims
In a further sign that the economy was perhaps more robust than expected, first-time claims for unemployment insurance filed by the recently laid off fell to 254,000 claims, the Employment and Training Administration reported last week.
This marked a 16,000-claim decline from the previous week’s total of 270,000 claims and was well below the 300,000-claim mark that economists consider indicative of a growing job market. In fact, this report marked the 70th consecutive week of initial claims below 300,000 claims, the longest streak since 1973.
The four-week moving average — considered to be a more stable measure of lay-offs — dipped to 264,750 claims, a decline of 2,500 claims from the preceding week’s average of 267,250.
Consumer borrowing for May increased 6.2 percent to a total of $3.62 trillion, according to last week’s report from the Federal Reserve. The increase outpaced market expectations of a $15.3 billion gain, instead of the $18.6 billion increase the month actually saw.
As in previous months, the big driver for May’s increase was non-revolving debt, such as student and car loans. That segment of consumer credit grew 7.3 percent to $2.67 trillion. Revolving debt, such as credit cards, increased an even 3 percent to hit $953.3 billion.
This week we can expect:
Tuesday — Wholesale inventories for May from the Census Bureau and the Bureau of Economic Analysis.
Wednesday — June import and export prices from the Census Bureau; June budget from the Treasury Department.
Thursday — Initial jobless claims for last week from the Employment and Training Administration; June producer price index from the Bureau of Labor Statistics.
Friday — Retail sales for June and business inventories for May from the Census Bureau; June consumer price index from the Bureau of Labor Statistics; June industrial production and capacity utilization from the Federal Reserve.
Written by Summit Mortgage Corporation located in Lakewood, Colorado.