June Employment Numbers Disappoint
With many analysts expecting stronger growth in employment in June, numbers released this morning from the Bureau of Labor Statistics were somewhat disappointing. Nonfarm payrolls increased by just 18,000 and the unemployment rate rose to 9.2 percent.
May employment figures were also revised downward, with only 25,000 nonfarm payroll jobs created that month. Thus, job creation over the past two months has been minimal, and certainly not enough to absorb the influx of new people into the workforce.
The manufacturing picture was mixed with 6,000 jobs created during the month. This reverses a slight decline in employment in May. Durable goods employment rose 15,000, but nondurable good manufacturers lost 9,000 workers.
Strong employment gains in fabricated metal products (up 7,800), machinery (up 4,100), and miscellaneous manufacturing (up 2,500) were offset by losses in food manufacturing (down 7,900), wood products (down 5,100), and plastics and related support activities (down 2,500).
The unemployment rate for manufacturing is also 9.2 percent, with higher unemployment for durable goods industries (9.7 percent) than nondurables (8.3 percent). Overall activity for the month declined somewhat. The average number of weekly hours dropped from 40.6 in May to 40.3 hours in June. Likewise, average weekly earnings fell from $961.81 to $954.71.
Overall, the June employment report reflects the weak economic environment for manufacturing over the past couple months. We have seen a rebound more recently for the industry, as seen through last week’s ISM report on manufacturing, some of the regional Federal Reserve bank surveys, and this week’s factory orders. In particular, the higher production of late has been led by durables, which is consistent with today’s numbers.
Looking ahead, I still forecast an improvement for manufacturers for the second half of this year. With employment being a lagged indicator, I would expect for job growth in the sector to pick up in the coming months. There is still a long way to go in terms of potential job gains for manufacturing. We need a stronger economy, a sound business environment, and increased opportunities for new markets overseas.
For more on the employment report read the statement from NAM President and CEO Jay Timmons on today’s report here.
Chad Moutray is chief economist, National Association of Manufacturers.