Employment: Continued Solid Job Gains

Bottom Line: Job gains were somewhat stronger than expected, even after accounting for modest negative revisions to prior data. Hourly earnings, perhaps the most critical metric for Fed policy at this point, rose as expected with modestly decelerating gains on a trend basis. Up 0.3% in June, wages in the 2nd Quarter annualized at 4.2%, slower than the six- and 12-month gains of 4.5% and 5.1%. Most of the wage deceleration on a trend basis has come from the service-providing sector while manufacturing wage gains have been steady to accelerating slightly. Overall, wage growth remains historically robust even with hints of deceleration. Job gains continued o decelerate on a trend basis across all sectors but remained historically robust. While the household survey (often more volatile) showed a decline in jobs, the medium-term trend remained in line with the establishment survey. The unemployment rate was steady with the employment-to-population metric, one favored by the doves on the Fed, just over 60 but still below pre-pandemic levels. Overall, this was another solid labor report. Given the  Fed's focus on the strength of the labor market as a critical factor behind sustained inflation, this will do little to dissuade the notion the Fed will likely continue rate hikes in July and September.

Payroll Employment rose by 372k in June, compared with market expectations for an increase of 266k. The prior 2 months were revised, lower in May by 6k and lower in April by 68k.Government jobs FELL by 9k. Consequently, private sector jobs ROSE by 381k.  Private education jobs rose by 18k. State and Local education jobs rose by 7k. Overall employment is now 4.3% ABOVE its year-ago level,  Over the past 12 months, 6,282k jobs have been created.

In June, the job gains were in

Jobs were shed in Government (-9k).The Unemployment Rate was UNCHANGED at 3.6%, in line with market expectations.Household employment fell by 315k while the labor force declined by 353k, resulting in a decrease in the number of unemployed of 38k.The Labor Force Participation Rate FELL by 0.1 percentage points to 62.2%.The Employment-Population Ratio FELL by  0.2 percentage points to 59.9%.The number of people Working Part-Time for Economic Reasons FELL by 541k to 3,694k. while Long-Term Unemployment FELL by 20k to 1,336k (accounting for 22.6% of the unemployed),  while the Mean Duration of Unemployment FELL by 0.2 weeks to 22.3 weeks.There are now 5.9 million people officially unemployed. In addition, there are another 5,656k people who say they want a job but are not currently looking for one.  Finally, another 3,694k people are working part-time because of slack economic conditions.The Index of Aggregate Hours ROSE by 0.3%, combining the solid gain in private payroll employment and the steady workweek. Hourly Earnings ROSE by 0.3% in June, in line with market expectations. Hourly earnings are now 5.1% ABOVE their year-ago level.

Weekly Earnings also ROSE by 0.3%, the result of the change in hourly earnings and a steady workweek.Weekly earnings are now 4.2% ABOVE their year-ago level.The Average Workweek was UNCHANGED at 34.5 hours, BELOW the market consensus of 34.6 hours.