The Job Market Heats Up: June 28 – July 2

Employers were more successful in filling open positions. Here are the five things we learned from U.S. economic data released during the week ending July 2.

#1

Hiring accelerated in June. The Bureau of Labor Statistics reports nonfarm employers added a seasonally adjusted 850,000 employees during the month, a ten-month high. The 145.759 million employed workers remained 6.764 million below the pre-pandemic payrolls peak in February 2020. Private sector employers added 662,000 workers (up from May’s 516,000 gain), split between 642,000 in the service sector and 20,000 in the goods-producing side of the economy. Leisure/hospitality was responsible for 343,000 added workers, with sizable gains also reported by professional/business services (+72,000), retailers (+67,100), and education/health services (+59,000). Public sector employment rose by 188,000 (although some of the gain reflected fewer than typical seasonal layoffs at public schools).

The separate household survey has the unemployment rate inching up 1/10th of a point to 5.9 percent. 151,000 people entered the labor force during the month as the labor force participation rate held steady at 61.6 percent. The 25 to 54 participation rate swelled by 4/10ths of a point to 81.7 percent (its highest point since March 2020). The count of part-time workers seeking a full-time job plummeted by 644,000 to 4.627 million (a pandemic low). The typical unemployed person has been out of work for 19.8 weeks (up a half week from May). The broadest measure of labor underutilization (the U-6 series) dropped to another pandemic low at 9.8 percent.

Factory orders rose in May. The Census Bureau estimates new orders for manufactured goods jumped 1.8 percent during the month to a seasonally adjusted $495.5 billion, its 12th month gain over the past 13 months. Factory orders have totaled $2.412 trillion thus far this year was 17.2 percent ahead of that from the same five months in 2020. Durable goods orders surged 2.3 percent (boosted by a 7.7 percent jump in transportation goods), while nondurable orders rose 1.0 percent. Shipments also increased for the 12th time in 13 months, advancing 0.7 percent to $490.4 billion. Unfilled orders grew for the fourth straight month (up 0.8 percent to $1.210 trillion), while inventories widened for the 11th time in 12 months (up 0.9 percent to $731.6 billion).

Construction spending slightly slowed in May. The Census Bureau reports the value of construction put in place declined 0.3 percent to a seasonally adjusted annualized rate (SAAR) of $1.543 trillion. Even with the decline, spending remained 9.5 percent ahead of its year-ago pace. Private sector spending decreased 0.3 percent to $1.203 trillion (+13.2 percent versus May 2020) as nonresidential spending slumped. Private sector residential construction spending grew 0.2 percent in May and was up 28.7 percent from a year earlier. Spending on single-family home construction was up 48.1 percent from a year earlier. Public sector construction spending was at an annualized $342.0 billion pace, off 0.2 percent from April and 8.7 percent from a year earlier.

Exports, imports, and the trade deficit all grew in May. The Census Bureau and Bureau of Economic Analysis estimate exports increased by $1.3 billion (to a seasonally adjusted $206.0 billion) and imports swelled by $3.5 billion ($277.3 billion). The resulting -$71.2 billion trade deficit was up 3.1 percent for the month and 29.7 percent from a year earlier. The -$353.1 billion trade deficit racked up during the first five months of 2021 was up 45.8 percent over the same months last year. The goods deficit grew by $2.3 billion to -$89.2 billion while the services surplus eked out a $0.1 billion increase to +$17.9 billion. The U.S. had its largest goods deficits with China, European Union, and Germany.

Consumer sentiment measure hit a pandemic high in June. The Conference Board’s Consumer Confidence Index grew by 7.3 points during the month to a seasonally adjusted reading of 127.3 (1985=100). The index has not been this high since February 2020. The present conditions index added nine full points to 157.7 while the expectations index jumped 6.1 points to 107.9. 24.5 percent of survey respondents viewed current business conditions as “good,” while 19.5 percent saw them as “bad.” 54.5 percent of consumers indicated that jobs were plentiful, well above the 10.9 percent that felt jobs were “hard to get.” The press release noted that high inflation expectations “had little impact on consumers’ confidence or purchasing intentions.

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending June 19, First-Time Claims, seasonally adjusted): 364,000, -51,000 vs. the previous week, -1,072,000 vs. the same week a year earlier). 4-week moving average: 392,750 (-73.4% vs. the same week a year earlier).
  • Vehicle Sales (June 2021, Light Trucks and Automobiles, seasonally adjusted annualized rate): 15.365 million (vs. May 2021: 17.043 million; vs. June 2020: 14.630 million).
  • Pending Home Sales (May 2021, Index (2001=100), seasonally adjusted): 114.7 (+8.0% vs. April 2021, +13.1% vs. May 2020).
  • FHFA House Price Index (April 2021, Purchase-Only Index, seasonally adjusted): +1.8% vs. March 2021, +15.7% vs. April 2020).
  • Agricultural Prices (May 2021, Prices Received by Farmers): +1.8% vs. April 2021 +26.5% vs. May 2020.

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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