The US economy added more jobs than expected last month, and you can thank state and local government hiring for the increase.
Although job losses continued at the federal level in June, overall government employment rose by 73,000, bolstering an NFP headline that would’ve otherwise struggled to show a meaningful gain.
The topline readout from the June jobs report, released a day early to make room for Friday’s US holiday, was 147,000, 40,000 ahead of a subdued consensus. Revisions added 16,000 to the prior two months’ headlines.
As the figure shows, the three-month moving average is now 150,000, the highest since February.
Outside of education-related hiring subsumed in the state and local government categories, only health care and social assistance managed a decent result in the June report.
When a Democrat’s in the Oval Office, snarky sell-siders and right-wing bloggers are inclined to lampoon jobs reports where government hiring, health care and social assistance do the heavy lifting. Something tells me they won’t level the same criticism at this release.
Remember when we were “re-privatizing the economy”? That was the mantra earlier this year from Scott Bessent. Well, overall private hiring was just 74,000 last month, well short of the 100,000 consensus and the slowest pace since October.
As the figure shows, state and local government hiring outstripped private job creation in June.
I suppose Bessent can pivot to a jobs-themed version of Donald Trump’s Roe stance: “Government hiring’s been returned to the states.”
Rounding out the establishment survey, average hourly earnings rose 0.2% MoM and 3.7% YoY, both cooler than expected.
On the household survey side of the release, the unemployment rate ticked down to 4.1%, a tenth lower from May and below consensus. But the participation rate slipped to 62.3%, the lowest since December of 2022.
If immigration enforcement pushes the participation rate down, that’ll help cap the jobless rate even if hiring slows but… well, suffice to say there are limits and drawbacks to that “strategy.”
Total household employment rebounded from an enormous drop in the May release to show a 93,000 gain.
The narrative from Wall Street (and probably from mainstream financial media outlets) will be that between the decent NFP headline, the upward revisions to the prior months’ readouts and the optically encouraging decline in the jobless rate, a Fed cut in July’s off the table.
Maybe (probably) that’s correct, but this report hardly counted as a ringing endorsement of the US labor market. And certainly not from the perspective of anyone determined that the only jobs which count are those unrelated to government, education, health care and social assistance.
Did we need more government?
You enjoy public goods and services more than you engage with the private sector, you just don’t realize it.
Bro that’s woke CRT socialist ideology. You need to wean yourself off that fake lived experience and become a self reliant MAN WHO DEFENDS FREEDOM.
I think this is the first time I’ve ever seen H referred to as “bro”.
I guess your publication has finally reached the finance bros. Yay….
I get recognize the sarcasm now that I’ve read the other comment.
Yeah, definitely sarcasm there.
Of the total 147K, 58K is healthcare and social services, and 73K is government (state and local). How unproductive [imagine drippy sneer here].
A little color from a regular person: assuming teachers are categorized as state government employees, many teachers change jobs this time of year, creating the appearance of job gains. I suppose some new teachers are joining the workforce but the data on people entering the teaching field suggests that is not a robust pipeline of new worker bees. Also, many nursing undergrads are entering the workforce right now, including my niece and everyone in her graduating class. They are all getting scooped up. So prob some seasonality to the healthcare contribution, though not sure if that’s accounted for in their made up guesstimate.
State and local govt specifically education was a big increase. That is likely a seasonal adjustment error. The fomc is going to sleepwalk us into a slowdown.
The report was below average.
The fomc with solid support from the Trump administration, you must mean.
H-Man, once Powell sees the NFP print in the low 5 digits or below, he will move the rates down while navigating the tariff chop suey.