What were the employment trends in June?
The showed ongoing payroll growth at a more moderate pace than the 272,000 initially reported in May. In June employers added 206,000 jobs, a figure just below the previous 12-months鈥� average increase (220,000 jobs鈥搘hich factors in downward revisions to recent April and May data). Unemployment ticked up to 4.1%, reaching its highest level since November 2021. Industries including government, health care, social assistance, and construction had notable job gains while retailers and professional and business service industries saw small losses. The job market is not as tight as it has been, which should bolster confidence at the Fed that its policy is working and a rate cut may soon be appropriate. At the same time, continued job growth should keep U.S. consumer spending and economic growth in a solid range in the months ahead.
Although job gains ticked up, prior months were revised lower by a total of 15,000 jobs, and this month鈥檚 uptick was smaller than previous hiring sprees in March 2024 and December 2023. The data generally points to a gradually normalizing labor market, which is exactly what is needed at this stage of the economic cycle.
Overall, the job market has slowed from previous highs, but appears to be normalizing in a healthy way and should help bolster confidence that monetary policy is having its intended effect.
What else do we know about today’s job market?
Other showed 8.1 million job openings in May, up from a downwardly revised April reading, but still lower than the 9.3 million openings one year ago. The job openings rate was up to 4.9% from 4.8% the prior month, but down from 5.6% one year ago. Job quits steadied in the month at 3.5 million, and the rate of 2.2% was unchanged for a seventh month, down from 2.3% in October 2023. The data show a somewhat elevated openings rate relative to pre-pandemic highs (4.8%), while the quits rate is on par with trends in 2017 and 2018. Taken together, these data point to a labor market that continues to offer options for job seekers, and workers appear to approach job switching with a fair amount of confidence.
What does this tell us about what’s ahead?
Mortgage rates currently hover just below 7%, and have occupied a fairly narrow 6.9% to 7.1% range since mid-May. Because today鈥檚 job report lacked major fireworks, it is likely to help keep mortgage rates in their recent range. Job gains were modest enough to prevent a big surge in interest rates, but strong enough to stave off worries that a hard landing could be ahead. Meanwhile, the modest uptick in unemployment could help interest rates drift toward the lower end of the range until next week鈥檚 inflation reports.聽
What does today鈥檚 data mean for homebuyers, sellers, and the housing market?
Home sales have been stuck in the doldrums, as both buyer and seller interest has been dampened by these elevated mortgage rates. Higher borrowing costs eat into affordability and complicate trade-up decisions for homeowners who currently enjoy much lower mortgage rates. The reduction in mortgage rates and other borrowing costs that will likely coincide with the Fed鈥檚 decision to begin normalizing policy will provide a welcome wind in the sails of buyers and sellers alike, and today鈥檚 job report suggests that date remains just on the horizon.
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