By Paul Gomme and Peter Rupert
The BLS announced that employment in June rose 206,000, about 1/3 of that came from government employment. Downward revisions to the earlier months totaled 111,000.
The service sector saw a 117,000 increase with the health care and social assistance sector increasing 82,400; however the largest decline in the service sector came from temporary help services, falling 48,900 and has been in decline for a over the past year and a half or so.
Average hours of work remained steady at 34.3 and with the 136,000 private sector increase in employment meant only a small increase in total hours of work.
The household survey shows a 116,000 increase in employment. 277,000 more people entered the labor force and the number of unemployed persons increased 162,000. These changes led to an increase in the unemployment rate from 3.96% to 4.05%.
Policy Chatter
The labor market continues to run strong, despite the recent mediocre showing although the unemployment has risen slightly to 4.05%. Inflation has trended down and, depending on the particular measure, is not a great cause for concern. Some are calling for an interest rate cut my the Fed. Indeed, Mark Zandi, Chief Economist at Moody’s, has said that the Fed should lower interest rates since the Fed “has hit their objective.” If they have hit their objective of full employment and low inflation, does it seem reasonable to be lowering, or raising rates, at this time. He does continue by saying that maybe the equilibrium interest rate for the economy could be higher, but he says it is not 5.5%. Obviously this is an issue that the Fed will be dealing with in the near future.
