- The most recent Employment Situation Summary from BLS shows that the unemployment rate rose slightly in June by 0.2 percentage points to 4.9 percent due to a larger workforce.
- At the same time, total nonfarm payroll employment rose by 287,000 jobs, a 2.1 percent year-over-year increase representing tremendous improvement over May.
- NAR Chief Economist Lawrence Yun posits that a stronger job market could lead to slightly higher mortgage rates in the future.
The underwhelming 38,000 new jobs added in May 2016, according to last month’s Bureau of Labor Statistics (BLS) Employment Situation Summary, left economists sweating a little.
How did June shape up, though?
As it turns out, June 2016’s Employment Situation Summary from BLS shows that total nonfarm payroll employment rose by 287,000 jobs last month, which indicates 2.1 percent year-over-year growth.
This represents a tremendous rebound from the previous month, especially because June’s report also downwardly revised the total number of May job additions to only 11,000. Economists note, however, that progress has slowed a bit from the post-recession growth rate high recorded in February 2015 at 2.5 percent.
Furthermore, the unemployment rate rose slightly in June by 0.2 percentage points to 4.9 percent — but that’s due to an increase of 414,000 people in the workforce, said Doug Duncan, Chief Economist at Fannie Mae in an emailed statement.
“Today’s employment report will allay fears that a recession is under way or imminent,” Duncan added. “The strong 287,000 headline jobs number adds back the Verizon strikers, shows strong hiring by state and local governments (which is where the vast majority of government workers are employed), and significant contributions by hospitality and leisure as well as education and health care.”
Ralph McLaughlin of Trulia relayed a similar positive sentiment.
“The June jobs report was perhaps the only one in recent memory where economists were just as, if not more, interested in the previous month’s revisions than the current month’s estimates,” he said in an email. “As it turns out, May was indeed a bad month, but June numbers ushered in relief that the U.S. labor market is doing well in a maturing economic cycle.”
“Although the rate of year-over-year job growth appears to be flattening, the short-run impact on housing is likely to be negligible. Not only is tight inventory keeping prices buoyed in many markets, growth in residential construction employment is outpacing total job growth by a factor of two.
Digging into the details
The pool of unemployed individuals grew by 347,000 people, for a total of 7.8 million. This indicates a slight reversal from May’s number of unemployed persons, which dropped to 7.4 million (an unemployment rate of 4.7 percent) that month. However, the increase is more in line with those unemployment numbers recorded between August 2015 to April of this year, BLS noted.
Diving into the major worker groups, the unemployment rates for several sects experienced little or no change. This includes adult men (4.5 percent), teenagers (16.0 percent), Blacks (8.6 percent), Asians (3.5 percent) and Hispanics (5.8 percent). However, the rates for adult women and Whites both rose — to 4.5 percent and 4.4 percent, respectively.
The number of long-term unemployed individuals remained stable in June at 2.0 million, making up 25.8 percent of the unemployed total.
Despite declining in May, the number of jobs lost increased by 203,000 to 3.8 million in June. At the same time, the labor force participation rate held steady at 62.7 percent.
Moreover, those workers employed part-time for economic reasons — in other words, individuals who would prefer to find full-time employment — dropped by 587,000 to 5.8 million last month, which balanced the increase in May.
Last month, there were 1.8 million people considered marginally attached to the labor force, meaning they are available for work and want a job, but are not currently in the labor force. This is mostly unchanged from a year prior.
The number of discouraged workers, who have indicated that they are not looking for work because they do not believe jobs are available for them, were down by 151,000 year-over-year to 502,000 total.
NAR Chief Economist Lawrence Yun’s immediate reaction to this morning’s BLS release was also optimistic.
“June’s job growth represents a spectacular rebound,” he said in an emailed statement. “It’s also comforting in terms of consistency on a year over year basis — despite some monthly swings — with around 2.5 million net new job additions over the latest 12 months. Further, dynamism is rising with more gross hiring and more people switching to different employers.
“This trend is showing up in wages – the best year-over-year rise in many years. The stronger job market means mortgage rates will likely rise a bit from historic lows. The only concern is still sluggish employment rate at under 60 percent of adults compared to 63 percent before the recession. All in all, good news for home sales and increased demand for commercial spaces.”
The BLS surveys approximately 146,000 businesses and government agencies each month as part of its Current Employment Statistics (CES) program. These businesses and agencies represent approximately 623,000 individual worksites, and the CES collects data on employment, hours and earnings of workers on nonfarm payrolls.