Private-sector employment finally topped pre-pandemic levels. Here are the five things we learned from U.S. economic data released during the week ending July 8.
June was another month of robust job creation. Nonfarm employers added a seasonally adjusted 372,000 workers to their payrolls in June, nearly matching April and May job gains of 368,000 and 384,000, respectively. The Bureau of Labor Statistics indicates that private-sector employment finally has exceeded pre-pandemic levels at 129.675 million. Nonfarm payrolls, which also include public sector workers, remained 524,000 below their February 2020 peak. Industries adding the most workers in June were health care/social assistance (+77,800), professional/business services (+74,000), and leisure/hospitality (+67,000). Average hourly earnings inched up by four cents to $32.08. Average weekly earnings of $1,106.76 were 4.2 percent ahead of their year-ago pace.
The separate household survey kept the unemployment rate at its pandemic-low of 3.5 percent, even as 353,000 people departed the labor force. The labor force participation rate slipped by 1/10th of a percentage point to 62.2. The 25-54 participation rate slumped by 3/10ths of a point to 82.3 percent. The typical unemployed person was out of work for 8.5 weeks (down 1.1 months from May’s report), while the number of part-time workers desiring full-time work plummeted by 707,000 to 3.621 million. Finally, the broadest measure of labor underutilization fell by 4/10ths of a percentage point to a pandemic low of 6.7 percent.
Employers continued to have plenty of job openings in May. The Bureau of Labor Statistics reports that employers had 11.254 million available jobs on the month’s final day, down 427,000 from the prior month but 16.8 percent ahead of the year-ago pace. The private sector was responsible for 10.212 million of the available jobs, with retail, professional/business services, health care/social assistance, and accommodation/food services reporting at least a million openings. Hiring slowed by 35,000 in May to 6.489 million (+6.5 percent versus May 2021) and outpaced the 5.983 million people who separated from their jobs. 4.270 million people quit their jobs during the month, down 57,000 from April but up 11.3 percent from a year earlier and still at near-record levels.
The service sector’s rate of growth slowed slightly in June. The Services PMI fell to its lowest reading since May 2020, losing 6/10ths of a percentage point to 55.3. Even with the decline, the Institute for Supply Management measure remained above 50.0—indicative of an expanding service sector—for a 25th straight month. While the business activity/production index improved, indices for new orders, employment, and inventories declined in June. All 18 tracked service sector industries reported growing during the month, led by mining and management of companies. Challenges reported by survey respondents included “[l]ogistical challenges, a restricted labor pool, material shortages, inflation, the coronavirus pandemic, and the war in Ukraine.”
The trade deficit slightly narrowed in May. Exports grew 1.3 percent to $255.9 billion and imports increased 0.6 percent to $341.4 billion. As a result, the trade deficit contracted by $1.1 billion to -$85.5 billion. The Census Bureau/Bureau of Economic Analysis measure has totaled -$456.0 billion thus far in 2022, up 38.4 percent from a year earlier. Over the same five-month period, exports and imports have risen 19.4 percent and 24.0 percent, respectively. In May, the good deficits shrank by $2.9 billion to -$105.0 billion, while the services surplus fell by $1.7 billion to +$19.4 billion. The U.S. had its largest goods deficits with China, the European Union, Vietnam, Mexico, and Canada.
Factory orders rose in May. The Census Bureau reports that new orders for manufactured goods jumped 1.6 percent to a seasonally adjusted $543.4 billion. Orders have totaled $2.626 trillion thus far in 2022, up 13.2 percent over the comparable months last year. Orders for durable and nondurable goods increased by 0.8 percent and 2.3 percent, respectively. Shipments rose 1.8 percent to $544.4 billion in May and have totaled $2.608 trillion thus far in 2022 (+13.4 percent versus 2021). Unfilled orders continued to grow, adding 0.4 percent to $1.110 trillion, while inventories swelled 1.3 percent to $797.9 billion. The unfilled orders-to-shipments ratio shed seven basis points to 5.98.
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending July 2, 2022, First-Time Claims, seasonally adjusted): 235,000, +4,000 vs. the previous week, -168,000 vs. the same week a year earlier). 4-week moving average: 232,500 (-44.0% vs. the same week a year earlier).
- Wholesale Trade (May 2022, Merchant Wholesaler Inventories, seasonally adjusted): $878.6 billion (+1.8% vs. April 2022; +20.9% vs. May 2021).
- Consumer Credit (May 2022, Outstanding Consumer Credit Balances (net of real estate), seasonally adjusted): $4.588 trillion (+$22.3 billion vs. April 2022, +7.3% vs. May 2021).
- FOMC Minutes
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What We Learned About the U.S. Economy Last Week 