June jobs report indicate hiring slowdown: CEI analysis

On Friday, the Bureau of Labor Statistics released June’s jobs numbers which reported an addition of 206,000 jobs to the economy compared to May’s revised 218,000 jobs, indicating a slowdown in hiring. While the labor market is at a decent place, a gap in skilled workers still hampers the economy.  

CEI Senior Economist Ryan Young:

“The labor market remains in good shape, though not perfect shape. The unemployment rate went above 4 percent for the first time in two and a half years, ending the longest such streak since the Beatles were still together.

“The labor force participation rate went from 62.5 to 62.6 percent. This is still about half a percentage point lower than before the pandemic, though better than in 2015, and the trend for most of the last three years has been up. Policymakers can help labor participation further improve by lifting barriers to work such as occupational licensing, permitting, and other regulations.

“Full employment is generally seen as an unemployment rate below 5 percent. The current 4.1 percent qualifies. Job growth will slow at some point simply because we’re near full employment. Hopefully the Federal Reserve realizes this as it considers whether to cut interest rates at its next meeting July 30-31. Officials want to cut rates but would be wise to hold off to help fight still-high inflation. A good labor market gives them a reason to hold off, since the economy does not need stimulus.”

CEI Research Fellow Sean Higgins:

“The Labor Department’s report that the economy added 206,000 jobs in June, in line with economists’ expectations, reflects a slowing in hiring by employers. The shift is mainly because they’re struggling to find qualified applicants. The labor force participation rate, currently 62.6 percent, hasn’t moved significantly in a year. Meanwhile, the number of people not in the labor force who currently want a job declined by 483,000 in June.

“Those workers who are good fits for the jobs on offer are getting snatched up but they’re not being replaced quickly enough with similarly skilled new entrants into the workforce. Consequently, the pool of qualified workers remains stubbornly small even though the overall number of workers has grown, bringing the official unemployment rate to 4.1 percent, up from 3.6 percent this time last year.

“Average hourly earnings increased by 10 cents in June and are up 3.9 percent over the last year. Employers want more workers and will pay a premium for them yet still struggle to find the people they need.  A skills gap is throwing sand into the gears of the economy.”