Taking Stock Of The June Jobs Numbers

Jul 6, 2019
Originally published on July 6, 2019 11:04 am
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RENEE MONTAGNE, HOST:

The U.S. economy just keeps chugging along. Employers have been adding jobs month after month for almost nine straight years. And according to new numbers from the Labor Department, last month was a big one with 224,000 new jobs added. That's one of the factors the Federal Reserve will take into consideration when officials meet later this month to set interest rates. NPR's Scott Horsley joins us to talk about this. Hello, Scott.

SCOTT HORSLEY, BYLINE: Good morning, Renee.

MONTAGNE: I mean, the big job gains in June followed a rather disappointing record the previous month. What changed?

HORSLEY: Yeah. It was a really big turnaround. Three times as many jobs were added last month as in May when job growth was really anemic. We saw broad-based gains in June, solid growth in health care, business services, construction. We saw about 33,000 new government jobs, some of which may be tied to the upcoming census. We also saw, Renee, a lot of hiring in factories and in transportation. And that's important because both manufacturing and transportation can suffer in a trade war.

So the good numbers in June, which were an improvement over previous months, suggest manufacturing and transportation are weathering the trade tensions OK. And speaking of weather, a month ago, the White House blamed flooding on the Mississippi River for part of the lousy jobs numbers in May. The improvement we saw last month suggests that barge traffic at least on the Upper Mississippi is flowing again.

MONTAGNE: And back to the Federal Reserve. A lot of people have been expecting it to cut interest rates later this month. Does this change that?

HORSLEY: Not necessarily. Although the Fed's job may get trickier now as officials try to sort out just what's happening from all the conflicting data. The June jobs number is a big thumbs up, suggesting maybe the economy doesn't need any additional help right now in the form of lower interest rates. But there are some other indicators that are not so rosy. This past week, for example, we saw signals in both the manufacturing and the services sector suggesting a slowdown. So that could point the Fed in the direction of cutting rates if only as a kind of insurance policy against a sharper downturn. Finally, you have President Trump who continues to browbeat the Fed, saying the economy could be growing faster if they just pump more money out there. Federal Reserve officials insist they are not swayed by that kind of political pressure, but it is pretty hard to ignore.

MONTAGNE: Well, wages have been going up as well but actually not that much. So if the job market is so strong, why aren't workers seeing more money in their paychecks?

HORSLEY: Good question. Over the last year, wages have gone up by a little over 3%. That is faster than inflation, so workers are seeing real gains in their buying power but not the kind of gains you might expect when unemployment is as low as it is. We hear a lot of grousing from employers that they have trouble finding workers to fill vacant jobs, but it hasn't triggered the kind of acceleration in wages that you might look for. One reason may be that the supply of workers keeps growing. People who have been on the sidelines are joining or rejoining the workforce. We saw 335,000 people enter the workforce last month. Unemployment actually inched up just a little bit because there were more people joining the workforce than actually found jobs. So that is helping to keep a lid on wage gains.

MONTAGNE: And how about weak spots - any in this jobs report?

HORSLEY: The big weak spot, Renee, is retail. We have just been seeing a steady erosion of retail jobs - 6,000 lost last month, 7,000 the month before, 15,000 the month before that. The whole retail industry has just been going through a wrenching reorganization with chains like Toys R Us and Payless laying workers off. Some of that reflects a shift to e-commerce, so you are seeing job gains in categories like warehousing. But if you work at the mall or some other corner of retailing, this is a really tough environment.

MONTAGNE: NPR's Scott Horsley. Scott, thanks very much.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.