With June's payroll increase, the average monthly job gain for the last 12 months in the United States is 250,000, according to BLS. Job gains in April and May were revised downward to 187,000 and 254,000, respectively, which was a combined 60,000 lower than previously reported. Still, job gains have averaged 221,000 per month for the last three months and 250,000 over the 12-month period prior to June.
Wage growth slowed in June, with average hourly earnings for all employees holding steady at $24.95. Over the year, average hourly earnings have increased by 2 percent, according to BLS. For production and non-supervisory employees, average hourly earnings moved up 2 cents in June to $20.99.
"Today’s employment situation report for June continues to show strength in the labor market – 223,000 new jobs, averaging 221,000 over the last three months, and a drop in the unemployment rate to 5.3 percent continues to indicate increased aggregate demand in the economy," said Mark Fleming, Chief Economist with First American. "While average hourly earnings are rising slowly, it’s a good sign that the economy is putting more people to work. The housing market will benefit from strengthening labor market conditions for the average American, but continued good news like this will increase the likelihood of rate increase by the Fed in the fall. American’s may have to pay a little more to finance a home but that may be a small price to pay for a strong and vibrant labor market with choice and opportunity. Raising rates can be good for the housing market."
The number of persons defined as unemployed declined by about 375,000 down to 8.3 million in June, according to BLS. In June, the BLS reported 1.9 million marginally attached workers, which was little changed year-over-year, and 6.5 million were employed part-time for economic reasons (sometimes called involuntary part-time workers), also little changed. There were 653,000 discouraged workers in June (persons not currently looking for work because they believe there are no jobs available), essentially unchanged from a year earlier.
The unemployment rate most commonly reported, called the U3 rate, declined by 0.2 percentage points from May to June down to 5.3 percent. The U6 unemployment rate, which counts both people without work seeking full-time employment and those workers "marginally attached to the labor force and those working part-time for economic reasons," dropped 0.3 percentage points month over month down to 10.5 percent and is down from 12.1 percent in June 2014. The U6 unemployment rate has not been below 10 percent since May 2008, when it was reported at 9.7 percent. It last reached its peak of 17.1 percent in April 2010.
The civilian labor force declined by 432,000 in June, which calculated to a drop of 0.3 percentage points down to 62.6 percent. June's employment-population ratio was 59.3 percent and has shown very little movement in the last year. BLS reported large job gains in professional and business services, health care, food services and drinking places, retail trade, and financial activities for June, but gains in construction, manufacturing, wholesale trade, information, and government were little changed over the month.
"The 0.2 percentage point decline in the unemployment rate to a seven-year low masks the bleak news that the labor force participation rate fell three-tenths to the lowest reading since October 1977," said Doug Duncan, SVP and Chief Economist at Fannie Mae. "Particularly disappointing was the unchanged construction payrolls figure, weighed down by the largest drop in residential construction employment in nearly five years. However, as housing demand is heating up amid lean inventories, boosting rents and home prices, we expect home building activity and residential construction employment to pick up. One concern is that builders may find it increasingly difficult to hire skilled workers without substantially raising wages, which are already increasing at a strong clip. We continue to see a bounce-back in second quarter economic growth, building momentum into the second half of the year, with housing acting as a tailwind."