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Economic Watch: Employment Growth Remains Strong

July 7, 2017

By Evan Lockridge

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The number of job gains showed no signs of easing up in June, as the Labor Department reports strong additions, with hiring better than previously estimated.

There were 222,000 non-farm jobs added last month, far better than a consensus estimate from analysts. The unemployment rate was little changed at 4.4% as more people looked for jobs.

Despite the overall gain in June, for-hire trucking shed 1,400 jobs in June. The wider transportation and warehousing sector added 2,400 jobs, due mainly to gains in couriers/messengers and passenger transportation.

The department also revised upward the performance of job gains in May and April, reflecting an additional 47,000 jobs for the two months combined.

Unemployment is down half a percent from a year ago – double that when including sources of hidden unemployment such as discouraged workers, according to Nathan Janzen, senior economist at RBC Economics Research.

“Wage growth has moderated somewhat year-to-date but ticked higher in June, with an increasingly tight labor market arguing more gains are on the way."

“Wage growth has moderated somewhat year-to-date but ticked higher in June, with an increasingly tight labor market arguing more gains are on the way,” he said. “On balance, the labor force data continues to suggest that the economy is having little difficulty absorbing Federal Reserve [interest] rate hikes to-date and should provide additional confidence that more are warranted.”

Overall in June, employment rose in the health care, social assistance, financial activities, and mining sectors. Employment growth has averaged 180,000 per month so far this year, in line with the average monthly gain of 187,000 in 2016.

Wells Fargo Securities noted in the goods sector, manufacturing employment posted a small gain, while hiring in construction was up a solid 16,000 jobs, likely reflecting some seasonal improvement.

“Our outlook remains for a rebound in real gross domestic product growth in the second quarter and gains of roughly 2.5% to 3% percent for the second half of this year,” said John E. Silvia, chief economist at Wells Fargo Securities.

The report follows a separate one from payroll processor ADP the day before that showed 158,000 private sector jobs were added in June, while the May total of jobs added was revised down from 253,000 to 230,000.

“The job market continues to power forward. Abstracting from the monthly ups and downs, job growth remains a stalwart between 150,000 and 200,000,” said Mark Zandi, chief economist at Moody’s Analytics. “At this pace, which is double the rate of labor force growth, the tight labor market will continue getting tighter.”

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